Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — HEALTH

Accident and Emergency Departments

Mr. Gapes: To ask the Secretary of State for Health when he next plans to visit Redbridge and Waltham Forest health authority to discuss the situation in local accident and emergency departments. [2172]

The Parliamentary Under-Secretary of State for Health (Mr. John Horam): My right hon. Friend has no plans at present to do so.

Mr. Gapes: Is the Minister aware that there is a serious crisis in accident and emergency departments in Redbridge and Waltham Forest health authority, that Whipps Cross hospital closed on 14 November and told doctors not to send people there, that King George hospital has regularly told ambulances to go away, and that some of my constituents have had to wait on trolleys for 10, 12, 14 or, in one case, 24 hours? In one case, a constituent was questioned about an incident by the police in front of other people in the area. Is not that a disgrace? When will the Government do something about the crisis in accident and emergency departments in Redbridge and Waltham Forest?

Mr. Horam: I understand the hon. Gentleman's point clearly because there are problems in those two hospitals in his constituency. However, he has exaggerated the problems. I can tell him that both the trusts involved are looking at the situation closely. They are taking short-term measures, and, to deal with bed management, are recruiting additional staff and so forth to cope with the problems. The problems are caused by a higher demand for A and E treatment throughout north London, which is also being examined by the trusts. The hon. Gentleman can be assured that things are improving.

Sir Michael Neubert: I welcome my hon. Friend to the Dispatch Box in his new responsibility. Is he aware that the A and E service in the adjacent Barking and Havering area is already under strain as a result of the decision to concentrate casualty at Harold Wood rather than at Oldchurch hospital in my constituency? If the service at King George hospital, Ilford—the hospital to which many of my constituents will in future have to turn—is also to be terminated, that will result in an unacceptable reduction in standards of access in an emergency.

Mr. Horam: Again, I understand my hon. Friend's point. I would be very concerned if the A and E

department at King George hospital were to close. I have no information to that effect. On the contrary, I understand that there is no intention of closing the A and E department at King George hospital.

Mr. Barron: Does the Minister accept that the picture which has just been painted is a national one? Accident and emergency departments are currently closing their doors because of a shortage of beds, and patients are waiting hour after hour on trolleys in corridors. The Minister should recognise that A and E departments are twice penalised by the internal market: a lack of bed space means that they cannot meet patient charter times, but because they cannot meet those times, purchasers are withholding payment. The Secretary of State has announced this morning the Government's so-called blitz on bureaucracy. Given that the Government created the internal market, will his announcement be followed by an apology to people who work in health and to the British people about the mess, and will he listen to what the British people want from the NHS, that is, proper patient care and not the privatisation that is creeping in at hospitals throughout Britain?

Mr. Horam: That sounded like a statement of Labour party policy in a nutshell. Labour Members have nothing more to say. The fact is that the hon. Gentleman in his calmer moments will surely realise that he is exaggerating. The hon. Member for Ilford, South (Mr. Gapes) was rightly referring to a situation in his constituency and that was perfectly fair, but in London as a whole 35 A and E departments are open 24 hours a day. Some £37 million have been spent over the past five years and things are definitely improving.

Dame Elaine Kellett-Bowman: Does my hon. Friend accept that this is by no means a national situation, and will Opposition Members appreciate that there are some hospitals in the country that run their affairs efficiently? I have today heard from the head of the accident and emergency department in Lancaster that we have no problems because we treat our staff well and we have a good reputation. Other hospitals might try doing likewise.

Mr. Horam: I am delighted to hear it. As a Lancastrian, I am delighted that Lancashire is once again leading the country.

GP Fundholders

Mr. MacShane: To ask the Secretary of State for Health what is the current percentage of general practitioners who have moved to fundholding status; and what is his estimate for the percentage of GP fundholders over the next two years. [2173]

Mr. Hinchliffe: To ask the Secretary of State for Health what steps he has taken to evaluate the impact of GP fundholding. [2175]

The Secretary of State for Health (Mr. Stephen Dorrell): Independent evaluation has repeatedly demonstrated the benefits of fundholding. That is why the Government are committed to further development and expansion of the scheme. Over 39 per cent. of general practitioners in England are already fundholders and this is expected to rise to over 50 per cent. by next April, with more practices preparing to join in 1997.

Mr. MacShane: I am grateful to the Secretary of State for his reply, which shows that by next year, half of


Britain's GPs will have to operate like small business men. Can he answer a more important question? According to figures that he gave me last week, £66 million is now spent on the bureaucracy of administrating fundholders. That £66 million is almost exactly equivalent to the cost of the 15,000 hip operations on hospital waiting lists. We are all delighted this week that the Queen Mother came out so well from her operation. Will the right hon. Gentleman stop that money being spent on bureaucracy and give people on the hip operation waiting list some hope?

Mr. Dorrell: I am certainly not doing anything to undermine the development of the fundholding scheme. All the research that has been done on that scheme demonstrates that the extra administrative cost, which is certainly there, delivers improved value to national health service patients. The question is for the Labour party. Does it agree with its previous health spokesman that it should abolish fundholding, or with the present incumbent of that post that it is not a matter of abolition but replacement?

Mr. Hinchliffe: How does the Secretary of State justify ignoring clear evidence provided by GPs in my constituency of a two-tier system arising directly from fundholding?

Dame Elaine Kellett-Bowman: The hon. Gentleman is behind the times.

Mr. Hinchliffe: Is not it scandalous that 36,000 of my constituents are, according to their doctors, receiving a second-rate service as a result of the status of their GPs? Is not it true, as one GP who wrote to me said—that letter has been seen by the Minister for Health—that those who deny the two-tier system arising from GP funding are talking a lot of twaddle?

Mr. Dorrell: My hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) was right. The hon. Gentleman is behind the times. First, of the five cases that he mentioned the last time that he raised the issue in the House—I am sure that the hon. Gentleman will welcome the fact—two have had their operations in less than 12 months and the other three are on a waiting list for treatment in less than 12 months at Pinderfields hospital. Furthermore, both the fundholding and the non-fundholding GPs joined Wakefield Healthcare last week to issue a jointly agreed statement which said:
As far as Wakefield Healthcare and GPs, both fundholders and non-fundholders, are concerned there should be no difference in the way patients, whether they go to fundholders or non-fundholders, are treated.
That is the policy of every GP in Wakefield, whether a fundholder or a non-fundholder, and it is also the policy of Wakefield Healthcare.

Mrs. Roe: Has my right hon. Friend seen a recent interview with the hon. Lady for Peckham (Ms Harman) in Doctor magazine in which she says of the Opposition's plans for fundholding:
We don't call it abolition, we call it replacement.
Does my right hon. Friend think that fundholding doctors will be reassured at the prospect of being replaced and not abolished?

Mr. Dorrell: No, I do not think that they will be remotely reassured. Every fundholding GP in the health

service wants to hear what the Labour party would do if it ever found itself in government. The previous Opposition health spokesman said:
We can live with a whole range and variety of models.
She also said that the Opposition are committed to abolishing fundholding. Are they or are they not committed to abolition?

Mr. Spring: Is my right hon. Friend aware that an increasing percentage of GPs in Suffolk are in fundholding practices and that that is bringing benefits in the forms of increased personal counselling, chiropody for diabetics, and better diagnostic and physiotherapy services—all very much to the benefit of patients?

Mr. Dorrell: My hon. Friend is absolutely right. His experience in Suffolk is repeated throughout the health service. One of the two questions that I have answered jointly asked what steps I have taken to evaluate fundholding. My hon. Friend has offered a local evaluation, but it has also been evaluated by the National Audit Office, the Public Accounts Committee, the Fabian Society, the OECD and the health service research unit at the university of Oxford. They have all published evaluations of fundholding, and the only problem with them is that they have been inconveniently optimistic for the Labour party.

Rev. Martin Smyth: Since it is the intention to offer primary-led health care, do the Government intend to change FP10 to allow GP fundholders and others to provide new treatments for leg ulcers in the community rather than in the secondary sphere, which is more costly?

Mr. Dorrell: I shall certainly consider that specific proposal. We need to ensure that the maximum range of clinical care that can safely be delivered by practitioners in the primary care context is delivered. Such care has been provided throughout the country as a result of fundholding. If the hon. Gentleman has a specific idea, I should be happy to look at it.

Mr. Barry Field: Can my right hon. Friend confirm that the Isle of Wight has one of the highest percentages of GP fundholders in the country? Does he attribute that success to the fact that the Liberal Democrats opposed such a scheme before the election and then, after it, led the charge in forming a fundholding consortium on the Isle of Wight, which has given us such a high percentage of fundholders?

Mr. Dorrell: The Liberal party has had just as much difficulty as the Labour party in deciding its policy on the issue. Both parties forecast that there would be no support for fundholding when the scheme was launched. Both have found themselves embarrassed by the fact that, next year, more than half of all GPs in the health service will have opted voluntarily to join the fundholding scheme. My hon. Friend is quite right.

Mr. Burden: Can the Secretary of State tell me what the reaction of fundholders and other purchasers of health care in Birmingham will be when they look at the small print of the Budget? They will find that a promised 1.1 per cent. increase in funds will turn out to be equivalent to no more than a half per cent. increase, which will mean around £6 million cuts wherever health care is purchased. When the Secretary of State visits Birmingham next week, will he explain to the local people why their community services will be cut?

Mr. Dorrell: This is a question about primary care. One of the best bits of news in the Budget about primary care is that it allows for the continued growth of the family doctor service through the 4 per cent. real terms growth in resources available to it. I would have hoped that the hon. Gentleman might welcome that.

Mr. Dunn: Many thousands of people in the Dartford constituency have benefited from GP fundholding. Will the Secretary of State confirm that the Conservative party is the only party that supports that scheme? The Labour party is totally opposed to it now, as it always has been.

Mr. Dorrell: My hon. Friend is absolutely right that the Conservative party, and its Government, is the only party committed to the development of fundholding. Every fundholding GP and their patients want to know the policy of the Labour Front-Bench team. When the Opposition appear before a fundholding audience they say that they recognise that the freedoms available under the scheme have produced improvements. They give a soft message to fundholding doctors, but once they get back into the television studios they say that they are committed to abolishing the scheme. What is their policy? We are waiting.

Ms Harman: I presume, Madam Speaker, that I am supposed to ask a question rather than answer one. The Secretary of State has acknowledged that one of the effects of GP fundholding has been extra administrative costs. Is not it the case that as a direct result of the Government's NHS reforms the cost of NHS bureaucracy is an extra £1.5 billion every year? That money should be spent on patients, not on paperwork. I welcome the publication of the NHS bureaucracy league tables, which the right hon. Gentleman made available this morning, but can he explain to the House why it is that the worst health authority in the country—the one that spends most on bureaucracy—is Huntingdon, the Prime Minister's constituency?

Mr. Dorrell: The hon. Lady might have welcomed the fact that in that same health authority there is to be a 10 per cent. reduction in administrative costs next year. As she raised the subject, she might also have welcomed the fact that the announcements I made this morning represent a shift of resources out of grey suits into white coats of £280 million next year. There will be £280 million extra next year for the treatment of patients. When will the hon. Lady welcome that?

Mr. Anthony Coombs: Is my right hon. Friend aware that by April next year 100 per cent. of my constituents will be treated in GP fundholding practices? Does he agree that that is the result of decisions by GPs in order to give their patients the best possible level of primary health care services? In the light of that, is it not an absolute disgrace that the Labour party proposes either to abolish or emasculate GP fundholding?

Mr. Dorrell: I could not agree more with my hon. Friend. GPs in his constituency have chosen to operate a completely voluntary scheme because they believe that it will improve care to their patients. In that they agree with the Fabian Society and a wide range of other commentators who have looked at the scheme. We are still waiting for an answer from the Opposition Front Bench as to why they will not support the scheme.

Pharmaceutical Services Negotiating Committee

Mr. Turner: To ask the Secretary of State for Health when he last met the Pharmaceutical Services negotiating committee; and what was discussed. [2174]

The Minister for Health (Mr. Gerald Malone): Officials regularly meet the Pharmaceutical Services negotiating committee to discuss issues that affect community pharmacy contractors. Ministers meet the committee whenever it is appropriate.

Mr. Turner: I am sure that the Minister will have heard about the committee's anxieties and the cash flow problems that pharmacists are facing because his Department is an extremely bad payer. As he must be aware, small pharmacists in particular are concerned that they are not receiving within a proper time scale payment for prescriptions that they have already dispensed. That is making it impossible for them to solve their cash problems and they are creating redundancies. Should the attitude of the Minister's Department and the Government be causing redundancies at a time of massive unemployment? The Minister should stop his Department being such a bad payer and get on and pay the people the money that the Department owes them.

Mr. Malone: I read the briefing note that the hon. Gentleman is clearly using. It misses out a fact that perhaps the pharmacists did not discuss with him—if he had discussions with them and did not just read the note. A voluntary agreement that was negotiated with the pharmacists has been in place for some time. It sets out how the payments are structured so that they can be made as quickly as possible after the Prescription Pricing Authority has processed them. That agreement was highly welcomed when it was put in place and I am delighted to tell the hon. Gentleman that it is being honoured to the letter and payments are being made in the context of the agreement. Of course I recognise that pharmacists are business men and have to run their businesses in a proper way. They make a valuable contribution to the community and if there are any ways of taking that forward that we can discuss with them, I am always happy to do so.

Mr. Budgen: Does my hon. Friend agree that, like all other interest groups, pharmacists have a legitimate case? If the Opposition take up the arguments of every interest group in the community and ask the Government to pay 100 per cent. of their claims, public expenditure is bound to get out of control. Although it is certain that the Opposition will temporarily become popular with farmers, lawyers, civil servants and every other interest group that wants to get its snout into the public trough, that is a clear indication that public expenditure under Labour will get grossly out of control.

Mr. Malone: My hon. Friend is absolutely right. Every time that there is a request for additional funding, the Labour party accedes to it in the same breath as it suggests that taxation can be brought down, but those attitudes are incompatible. Unlike Labour, the pharmacists are always responsible when entering discussions. Last year the global sum from which they were paid was increased by some 2.5 per cent. The pharmacists also agreed to a change in the structure of the payments made to them, so that we can ensure that more payments go to pharmacists who provide more professional services. That was a welcome way to approach added public expenditure for added value. Labour says that payments should go up for no reason.

Mr. Ashton: Is the Minister aware that many people on regular prescriptions complain that chemists are giving short weight—that the doctor writes a prescription for 30 tablets but that the chemist dispenses only 24 or 26 tablets? People on regular monthly prescriptions are having to pay as much as one month extra per year because of that short measure. The pharmacists blame the packaging. Nevertheless, many members of the public feel cheated when they have paid more than £5 for a prescription but receive too few tablets. Will the Minister get together with the pharmaceutical and packaging industries to ensure that the customer gets what he pays for?

Mr. Malone: Rather curiously, the hon. Gentleman asked a question that might have more point in six months' time, as we introduce patient pack prescribing—which is in its early days and has not yet been generally introduced. Pharmacists must dispense the appropriate medicine according to the doctor's prescription. That will be the case when patient pack prescribing is introduced. It will ensure that the patient is given the appropriate amount of medicine to treat the symptom for which he sought a prescription from the doctor.

Mr. Deva: Will my hon. Friend join me in paying tribute to the important role played by pharmacists in helping people with self-medication, which contrasts sharply with Labour's health policies—which are all diagnosis and no prescription?

Mr. Malone: My hon. Friend is absolutely right. Community pharmacists play an important role in providing medical care, and it is one that we are extremely keen to encourage through the payment of the professional allowance for displaying pharmacy practice leaflets and health promotion literature. Pharmacists, as health care professionals, are keen to develop that important role.

Breast Cancer

Mr. Gunnell: To ask the Secretary of State for Health if he will make a statement on his Department's progress towards the use of specialist breast units for the treatment of breast cancer. [2176]

The Parliamentary Under-Secretary of State for Health (Mr. John Bowls): The Calman report forms the basis of our strategy for the development of cancer services. We have charged regional directors with the task of taking that forward and, where necessary, reconfiguring services to treat common cancers, including breast cancer, in specialised units.

Mr. Gunnell: Given that the Calman report regarded as urgent the move to specialist breast cancer care units, which was endorsed by the Health Select Committee report, is sufficient urgency being shown by the Department? I think not. Is not it important that the Government move rapidly to establish a network of such units, so that the fears that haunt many women in this country can be allayed by the provision of prompt, effective and thorough treatment in every area? Is not that absolutely necessary? Why are the Government so dilatory in moving to that position?

Mr. Bowis: The hon. Gentleman is uncharacteristically ungenerous in not acknowledging the work being done by the NHS. Calman reported only in April, since when regional offices have been working on the

recommendations. Calman set out a structure of primary care refering to cancer units for diagnosis and treatment and cancer centres at which rarer types of cancer—and particular specialist services, such as radiotherapy—would be available. The hon. Gentleman needs only to look in his own back yard. The United Leeds teaching hospitals have developed fine services that include a specialist unit. That is the way forward for Leeds, and the hon. Gentleman might have paid tribute to that development. We are looking to see how to develop services throughout the country for the benefit of patients.

Lady Olga Maitland: Will my hon. Friend join me in paying tribute to the Royal Marsden hospital in Sutton, in my constituency, which offers an excellent breast cancer service with particular expertise in early detection and palliative care? Does my hon. Friend agree that some of the extra budget allocated by the Chancellor should go to that superb service?

Mr. Bowis: I am happy to pay tribute to the Royal Marsden, and I was able to do so yesterday because I was at the Queen Elizabeth II centre when it received a charter mark award. I congratulate the hospital publicly again today. My hon. Friend is right to draw attention to the resources that my right hon. Friend the Secretary of State for Health has negotiated with my right hon. and learned Friend the Chancellor of the Exchequer—£1.3 billion more for the coming year; a 1.6 per cent. increase in real terms. I have no doubt that some of those resources will lead to further improvements in our cancer services.

Mr. McLeish: In view of the concern about high mortality rates for breast cancer, will the Minister reaffirm the Government's commitment to ensuring that a reduction in the mortality rate for breast cancer is a key part of the "Health of the Nation" strategy? Will he also confirm that he is satisfied with the progress that is being made to achieve the target of a 25 per cent. reduction by 2000? Will the Minister outline what steps he has taken to monitor progress at the district health authority level; and does he agree that the development and publication of local targets at DHA level is vital if the "Health of the Nation" strategy is to mean anything?

Mr. Bowis: There were about five questions there. I have already announced that our regional offices will examine the configuration of services, and will build on that. Of course we stand by our "Health of the Nation" targets. Progress has been made, and we want to see more. That is why we are developing services; why we are investing in services; and why much research is being done. I pay tribute to the range of research conducted by Government and by the voluntary sector and pharmaceutical companies.

Infant and Perinatal Mortality

Sir Sydney Chapman: To ask the Secretary of State for Health if he will make a statement about the change in (a) infant and (b) perinatal mortality rates in the last 15 years. [2177]

Mr. Dorrell: Infant and perinatal mortality rates are at their lowest levels ever. Deaths of children aged under one year—the infant mortality rate—fell by half between 1979 and 1994. Stillbirths and deaths of babies less than a week old—the perinatal rate—fell by nearly 40 per cent. over the same period.

Sir Sydney Chapman: I warmly welcome my right hon. Friend's reply, which reveals a staggering reduction


in the number of fatalities. Does he agree that that is due principally to three factors; first, the great advances in medical technology; secondly, the increasing skill of our doctors and nurses; and, thirdly, the vastly increased amounts of taxpayers' money put into the national health service? Does my right hon. Friend agree that those figures underline the increased quality of infant health care, like so many other NHS services, for the benefit of the whole nation?

Mr. Dorrell: My hon. Friend is precisely right on every count. Those indicators are interesting, because they are some of the relatively few health outcome indicators that are directly comparable with those in different countries. Such indicators tell heavily in favour of the good value and efficient health service delivered by the NHS, which has been consistently supported by the Government and which we shall continue to support.

Mr. Simon Hughes: Has the Secretary of State had a chance to look at the King's Fund's recent publication, "Tackling Inequalities in Health", which confirms—as is to be expected—that over the past 10 years there has been a widening gap between the rich and the poor, and that that gap is reflected by widening differentials in mortality rates for adults and infants? If that is so, what is the Department of Health doing to ensure improvements in health nationwide by increasing equality in wealth and income for all citizens?

Mr. Dorrell: I talked yesterday about some of the things that we are doing to ensure that we deliver, nation wide, the objectives of the national health service. The establishment of proper purchasing arrangements for the health services within the reformed management is designed precisely to target resources on health need. The Government's commitment to weighted capitation— I announced a further step towards its delivery yesterday—is also intended to eliminate variations. That commitment is precisely directed to answer the hon. Gentleman's concerns.

Dame Jill Knight: Does my right hon. Friend agree that it would be welcome, fair and right if the media sometimes concentrated on the remarkable advance that has been made in this part of the health service as in others, and that tiny babies are saved today who would not have had a hope of life even 10 or 12 years ago?

Mr. Dorrell: My hon. Friend is entirely right. It is a dry statistic that tells a very human story of which anyone interested in the NHS should be proud. It is a comparison between health care in Britain and health care in virtually every other developed country and it tells in favour of both our national health service and the Government's support for it.

Mr. Milburn: Although the overall fall in death rates is clearly welcome, will the Secretary of State explain why last year both the South Tyneside and the Sandwell health care NHS trusts had a perinatal mortality rate of 13.7 per 1,000 live births, while in Kingston and Richmond the rate was just 3.4 per 1,000 live births? Will he also confirm that, if all infants and children enjoyed the same survival rates as those in social classes I and II, up to 3,000 deaths a year might be prevented? Does that latter figure not show that the price of widening social and economic inequality under the Government is being paid for in the health of poorer people?

Mr. Dorrell: What the hon. Gentleman does not cover is two facts: first, that health outcomes are improving for all social classes in Britain; and, secondly, that the Government have put in place reformed management of the health service, precisely to ensure that health resources are targeted at health need. It is precisely for that reason that we changed the management of the health service. Since the hon. Gentleman raises the subject, I assume that he would now like to welcome that.

Huddersfield Health Care Services NHS Trust

Mr. Riddick: To ask the Secretary of State for Health if he will make a statement about the development package recently announced by the Huddersfield national health service trust. [2178]

Mr. Malone: I very much welcome this £10 million development programme. It will provide improved health care facilities for the people of Huddersfield, in the context of a modern health service.

Mr. Riddick: Does my hon. Friend agree that this £10 million development programme, across a range of health facilities in my local hospital, represents a remarkable investment in improved health care for the people in and around Huddersfield and is the sort of good news about which we never hear from Opposition Members? Is he aware that I get far fewer complaints about my local hospitals than, for example, about my local Labour council?

Mr. Malone: I am not surprised to learn of the content of my hon. Friend's postbag, because he does indeed have an excellent local hospital. May I, in the words of the trust chief executive, point out that
Never before have we had so many new developments planned on this scale … together, they form a major step forward for patient care"?
That is a great improvement, in the context of that particular hospital. What the Labour party always fails to acknowledge is that such things are happening throughout the country. Perhaps when it happens in the areas of Opposition Members, they might table the sort of question that my hon. Friend tabled today.

Mrs. Mahon: Does the Minister accept that what happens in Huddersfield impacts on Calderdale, because they share the same purchaser? Is he aware that the development about which he talks means that in Calderdale we will lose 300 badly needed beds?

Mr. Malone: Yet again, we have the hon. Lady complaining about investment in the health service which will benefit the whole range of the population that this hospital trust serves. Of course we understand that it is up to local health authorities to decide where they purchase their health care; now they will be able to do so on behalf of my hon. Friend's constituents and those of the hon. Lady. Those people can be served by this hospital through updated facilities in which £10 million is being invested. I would have thought that the hon. Lady might welcome that.

Haemophiliacs

Mr. John Marshall: To ask the Secretary of State for Health what representations he has received about making an ex gratia payment to haemophiliacs infected with hepatitis C. [2179]

Mr. Horam: Representations include seven earlier parliamentary questions, and five early-day motions. There was also an Adjournment debate initiated by my hon. Friend on 11 July and a short debate in another place. Ministers have received 291 letters.

Mr. Marshall: I congratulate my hon. Friend on his promotion to the Department of Health. Since his promotion, has he had a chance to read the impact study produced by the Haemophilia Society, which has been made available to his Department, which demonstrates the physical, financial and emotional hardship suffered by haemophiliacs? As the cause of that hardship, infected blood products, is the same as that which passed on the HIV virus to haemophiliacs, should not the Government's reaction be the same?

Mr. Horam: First, I congratulate the Haemophilia Society on its sensible review and my hon. Friend on his relentless questioning over many years, which has already achieved quite staggering results. I have not yet read the full review, but I shall do so as a matter of priority and I shall obviously take its conclusions most carefully into account.

Mr. Mudie: Does the Minister realise the stress caused to the families of individuals, such as a 13-year-old youngster in my constituency, who not only have to cope with haemophilia but have now been totally devastated by having to cope with the effects of hepatitis C? Please may we have an early and sympathetic decision to bring some hope to those families?

Mr. Horam: I assure the hon. Gentleman that the problem will always receive sympathy from me.

Residential Care

Mr. Thurnham: To ask the Secretary of State for Health if he will clarify the criteria used to assess voluntary groups providing high standards of care in residential settings for those with challenging behaviour, in respect of the application of necessary minimum levels of proper discipline and restraint. [2181]

Mr. Bowis: Regulations require that the owners and managers of homes should both safeguard and promote the welfare of residents. We expect statutory authorities to ensure that service providers should have clear, written policies on the management of people who may cause harm to themselves or others.

Mr. Thurnham: Does my hon. Friend agree that it is not an easy job to look after the severely mentally handicapped, and that common-sense disciplines should prevail over fashionable, impractical social services' ideologies which are certainly not in the best interests of the residents themselves?

Mr. Bowis: My hon. Friend is entirely right. When we are talking about difficult to manage individuals, we must ensure that the restraint and control used are sufficient to prevent a person from hurting himself or herself, other people or property. That is common sense, which must always take precedence over political correctness.

Human Fertilisation and Embryology Authority

Mr. Jamieson: To ask the Secretary of State for Health what plans he has to privatise the role of the Human Fertilisation and Embryology Authority. [2182]

Mr. Dorrell: None, Madam Speaker.

Mr. Jamieson: Is the Minister not concerned that access to in vitro fertilisation is so variable around the country, and barely exists at all in my part of Devon? Instead of talking about privatisation and hiving off, what action does he intend to take to ensure that that authority makes that vital service available to young couples throughout the country?

Mr. Dorrell: The hon. Gentleman accuses me of talking about privatisation, but when he asked me what plans I had for privatisation, I said none. That is hardly an accusation that can be made to stick. With regard to the development of IVF, I should have hoped that the hon. Gentleman might welcome the fact that that is a new science which has been developing fast within British hospitals and which is being made available by different health authorities in different parts of the country to the people of their areas. We have always made it clear that that is a matter for local decision making within individual health authorities, reflecting the health priorities of their districts.

Mrs. Ann Winterton: Does my right hon. Friend accept that there can be little public confidence in a body whose members and employees are involved with and generate their income from destructive experiments on living human embryos? Is it not a positive disgrace that not one person has been appointed to that authority who believes in the sanctity of human life and who reflects the majority view in Britain that such experiments are repugnant?

Mr. Dorrell: Strong views on the subject are held on both sides of the argument, the resolution of which, as the House knows, was achieved by a free vote during the passage of the legislation. The authority's membership is intended to reflect the necessary scientific expertise and the commitment to apply proper ethical standards to the use of that science. My hon. Friend may not like every member of the authority, but I hope that she will at least endorse the objectives that guide the authority's deliberations.

Hospitals (Emergency Admissions)

Mr. Rooney: To ask the Secretary of State for Health what assessment he has made of trends in the numbers of emergency admissions to hospitals. [2183]

Mr. Dorrell: The number of emergency admissions to hospital increased by an average of 3 per cent. each year in the five years to 1993-94. That is broadly in line with the increase in total admissions.

Mr. Rooney: Is the Secretary of State aware that staffing levels in Bradford royal infirmary's accident and emergency department are far worse than those in any comparable department in the country? Has he any intention of meeting regional and district health authorities to set minimum staffing levels so that patients charter standards are met?

Mr. Dorrell: Patients charter standards define the standard that a patient is entitled to expect when he or she approaches the health service for care, whether through an accident and emergency department or through any other department. It is obviously the responsibility of trust


management, in consultation with the health authority, to make certain that those standards are delivered. I am sure that that will be the guiding principle in Bradford, as in every other part of the country.

Mr. Congdon: Does my right hon. Friend agree that those figures demonstrate the need for hospitals to have proper systems in place to ensure the prompt admission and speedy discharge of patients? Is it not vital for social services departments up and down the country to get their act together to ensure the proper discharge of elderly patients into the community?

Mr. Dorrell: My hon. Friend is entirely right. The relationship between the health service and social services departments in every part of the country is the key to the delivery of the objectives of both the health service and social services departments, and it is given a high priority throughout the health service.

Oral Answers to Questions — PRIME MINISTER

GP Fundholders (Lichfield)

Mr. Fabricant: To ask the Prime Minister if he will meet a delegation of general practitioners from Lichfield to discuss the future of fundholding. [2202]

The Prime Minister (Mr. John Major): Fundholders' views on developing the success of the scheme are always welcome. Any detailed recommendations will, of course, be considered.

Mr. Fabricant: I am grateful to my right hon. Friend for his answer. Is he aware that every general practitioner in Lichfield will be a registered fundholder? The reason is that those GPs believe in the Conservative party's crusade for choice: they believe that it is right for them to be able to choose the consultant and the hospital that are right for them. Does my right hon. Friend realise that they are appalled at the Labour party's plan to abolish fundholding? Does that not give the lie to Labour's crusade for schools, which is evidently empty rhetoric—just another empty soundbite?

The Prime Minister: I agree with my hon. Friend that GP fundholding has improved patient care and increased patient choice up and down the country. An increasing number of doctors are choosing to become fundholders, and I welcome that, in Lichfield as elsewhere.
There is, of course, all the difference in the world between a policy that genuinely believes in choice—as ours does in relation to both health and education—and one that believes in choice for marketing reasons. We saw an instance of that this morning.

Engagements

Mr. Morgan: To ask the Prime Minister if he will list his official engagements for Tuesday 5 December. [2203]

The Prime Minister: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Morgan: Does the Prime Minister agree with me, and with all the other users of the Great Western main

line from Paddington to south Wales and the west of England, that the signals for railway privatisation are now firmly stuck at red? Now that the consortium Resurgence Railways, led by the Prime Minister's Huntingdon Tory crony, Mike Jones, has been rejected because it cannot raise the money, and the second-choice preferred bidders—led by the present management team at Western Region—cannot raise the money either, should we not be singing the old song "Let's call the whole thing off"?

The Prime Minister: That was rather contrived, I must say. Rail privatisation is going ahead, for one simple reason: it will deliver a better service for rail passengers. If the hon. Gentleman and his hon. Friends really think that, over the past 40 years, the public have had the rail service that they would like, I do not know where he has been.

Mr. Bill Walker: Does my right hon. Friend believe that, if he appointed Scottish-based Members of Parliament to key Cabinet posts such as Chancellor of the Exchequer, Foreign Secretary and Chief Whip, and then proposed to set up a Parliament in Edinburgh that failed to address the West Lothian question, that would be good for the Union of the United Kingdom and for relations between Scotland and the rest of the UK?

The Prime Minister: I do, of course, have a number of very distinguished Scots in my Cabinet and in my Government, but I certainly agree with the thrust—[Interruption.] Not at the moment, it is true. My right hon. and learned Friend the Chancellor is distinguished, but he is not a Scot. The thrust of my hon. Friend's point is surely right—if the devolution plans proposed by the Opposition parties were to proceed, they would undoubtedly lead to conflict between Scotland and other parts of the United Kingdom. I hope that, even at this late stage, the parties advocating those policies will consider what they would mean in practice both for Scotland and for the rest of the United Kingdom and will decide that extra taxation for Scots alone is not a way to improve the prosperity of Scotland.

Mr. Blair: Does the Prime Minister agree, as the Government's report "Lifetime Learning" which was published today confirms, that Britain's skills and education attainments are nowhere near where they should be? Rather than encouraging a small number of children to leave state schools for the private sector, should we not be raising educational standards for the 7 million children who are educated in the state sector, many of whom do not get the education that they deserve?

The Prime Minister: Of course, as the right hon. Gentleman knows, we have produced a whole series of plans to raise educational standards over recent years, many of which, alas, have been strongly opposed by the right hon. Gentleman and his hon. Friends. If the right hon. Gentleman wishes to know where in the education sector there is failure, he might look at Hackney for example. [[HON. MEMBERS: "Islington."] I shall come to Islington. The right hon. Gentleman might look at Lambeth, where the secondary schools are so bad that the Office for Standards in Education has to inspect every one of them. He might, of course, look at Islington, which has just come absolutely bottom in the table of GCSE results. What is consistent among all those is that they are all Labour-controlled education authorities.

Mr. Michael Brown: Will my right hon. Friend take this opportunity to congratulate SCM Chemicals in my constituency, a subsidiary of the Hanson Trust group, which yesterday announced a massive expansion of its titanium dioxide plant? Is that not clear evidence that international investment is making my constituency the chemical capital of the world?

The Prime Minister: My hon. Friend is a formidable advocate for his constituency and his constituents. I hope he will agree that Government policy as well as his advocacy might have played some part in bringing that investment to his constituency.

Mr. Matthew Taylor: To ask the Prime Minister if he will list his official engagements for Tuesday 5 December. [2204]

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Taylor: Will the Prime Minister explain to the people of Cornwall and Devon why they should accept the Government's conclusions today that Government spending in the region compares favourably with that in the rest of the country, when every independent report shows that spending in the region is 10 per cent. less Department by Department, education to industry, than that in the rest of the country, despite high unemployment, low wages and a high cost of living?

The Prime Minister: As I think the hon. Gentleman knows, we have a number of measures to deal with those problems in the west country and elsewhere, and it is extremely important that those problems are dealt with. We are determined to address them and to improve the living standards and opportunities for people in the west country. That is what we have been doing and what we shall continue to do. It is pity that the hon. Gentleman seeks to denigrate every effort that is made.

Mr. Devlin: Has my right hon. Friend seen reports of the disgraceful intimidation and browbeating that is going on in Hurworth in my neighbouring constituency where the Labour party is trying to prevent a local school from opting out? Apparently, the whole affair is being organised by none other than the Leader of the Opposition, aided by the hon. Member for Darlington (Mr. Milburn.)

The Prime Minister: I believe that any form of intimidation of parental choice is to be condemned. Parents have a natural and a legal right to decide whether they want the school to which their child goes to opt out and they should be able to exercise that right without intimidation, either by the education authority or by anyone else. If there is evidence of that, I hope that those implicated in it will examine it without delay.

Ms Quin: To ask the Prime Minister if he will list his official engagements for Tuesday 5 December. [2205]

The Prime Minister: I refer the hon. Lady to the reply that I gave some moments ago.

Ms Quin: My question concerns the appalling human rights abuses in Nigeria, together with reports in the press today of confidential information from Home Office files being leaked to Tory central office and thence to the press. Will the Prime Minister order an immediate inquiry into

those leaks and further assure the House that there will be no deportations to Nigeria of people at risk from that murderous regime?

The Prime Minister: As the hon. Lady knows, our position on Nigeria is clear and, in company with others, we set that out clearly at the Commonwealth conference. The case in today's newspaper to which she refers was one where the applicant or his representative had chosen to make public details of their cases and allegations about their consideration. In those circumstances, the Home Office gave information that was necessary to set the record straight in response to telephone inquiries that it received and, subsequent to the information being given by the Home Office, it was also used by others.

Sir Michael Shersby: Will my right hon. Friend take time today to consider the outstanding success of Operation Christmas Cracker? Is he aware that some 12,000 police officers in 40 force areas today made a number of staggered raids in which more than 2,000 suspects were arrested, and recovered property ranging from bicycles to reptiles? Does he agree that that is one of the best Christmas presents that people could have?

The Prime Minister: I am grateful to my hon. Friend, who touches on a matter that is of importance to everyone. I certainly welcome the priority given to today's operation, which involves some 40 police forces and has occasioned more than 2,000 arrests. There is no doubt that, over the past couple of years, innovative policing methods have made a distinct impact on the crime level, and we are now beginning to see the crime statistics fall. It is policing of that sort that can give people considerable reassurance. [Interruption.] Opposition Members may scoff about crime falling, but it is a matter of importance to the public out there.

Mr. Foulkes: To ask the Prime Minister if he will list his official engagements for Tuesday 5 December. [2206]

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Foulkes: Has the Prime Minister seen the astonishing reports in the press that the official video of the party conference has been doctored to make the party chairman appear good, and to play down the popularity of the Secretary of State for Defence in the party? If the Conservative party cannot tell the truth about its own conference, is it any wonder that no one trusts it on tax?

The Prime Minister: From the party that has more spending pledges and higher tax in the pipeline than anyone else, I find that ironic. On the newspaper reports, the hon. Gentleman should look at reality, not newspaper reports.

Mrs. Peacock: Is my right hon. Friend aware that high-quality textiles from Yorkshire were used in the new James Bond film? James Bond may be ruthless in what he does to his enemies, but he is also particular about what he wears. Will my right hon. Friend join me in congratulating the three west Yorkshire textile companies that were involved in that project?

The Prime Minister: I am certainly happy to congratulate west Yorkshire and the textile industry and I hope that, as a result of that extra advertisement, they will sell far more of their textiles at home and abroad.

Ms Corston: To ask the Prime Minister if he will list his official engagements for Tuesday 5 December. [2207]

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Ms Corston: The Prime Minister describes himself as a one-nation Tory. Will he therefore tell us which is fairer—abolishing capital gains and inheritance taxes or implementing a starting rate of income tax of 10p?

The Prime Minister: I see that the shadow Chancellor is here. One of his hon. Friends, also a Front Bencher a year or so ago, referred in very scathing terms to precisely the sort of proposition that the shadow Chancellor made. It is a gimmick and the shadow Chancellor knows it. What is fair is to lower the basic rate of tax to 20p, which is what we are doing by raising thresholds so that one in four people now pays tax at 20p, by cutting the tax on savings for all basic-rate taxpayers so that they only pay 20p, and by reducing the basic rate of tax.
The hon. Lady reveals the deep innate distaste of the Labour party for cutting taxes. It is a spending party and a tax-raising party, while we cut taxes.

Mr. Max Madden: On a point of order, Madam Speaker, of which I gave you prior notice. You will have just heard the Prime Minister refer to what appears to be a major change in the long-standing policy of the Home Office not to disclose to a third party confidential information concerning anyone involved in immigration or asylum applications. In view of the disclosure by Conservative central office of information concerning a Mr. Igbiuidu, a Nigerian national seeking asylum in this country, could you, Madam Speaker, arrange for the Home Secretary to make an early statement about what changes the Home Office has made in its policy of not disclosing information about individual applications?

Madam Speaker: I appreciate the fact that the hon. Gentleman kindly gave me notice of his point of order. I certainly heard the Prime Minister's response today. I understand that the information was released by the Home Office. I, as Speaker, have no responsibility for the actions of Government Departments, but even so I took the opportunity this morning to look at the matter and I can tell the hon. Gentleman that it is precedented.

Mr. Andrew Mackinlay: On a point of order, Madam Speaker. I ask you to look in the Official Report tomorrow at question No. 1 to the Prime Minister, tabled by the hon. Member for Mid-Staffordshire (Mr. Fabricant). He asked a closed question. We all

understand the ground rules. A closed question prevents any supplementary from being asked, other than in relation to the subject matter of the question.
My complaint is that the Prime Minister did not respond either in detail or by implication to the question, which specifically asked whether he would meet general practitioners from Lichfield. There was no mention of Lichfield in the Prime Minister's reply, and certainly not in relation to general practitioners. If the rules are to apply, a Minister has to respond to a question, or it is unfair to Opposition Members.

Mr. Fabricant: rose—

Madam Speaker: Sit down. I am taking no further points of order on this matter. Indeed, it was not a point of order anyway. I am not responsible for the answers given by Ministers. We shall now get on with the business of the House.

Mr. Peter L. Pike: On a point of order, Madam Speaker. Many of us could not hear what you said in response to my hon. Friend the Member for Bradford, West (Mr. Madden). For clarification, could you tell us whether you said that the procedure was precedented or a precedent?

Madam Speaker: It is precedented. If the hon. Gentleman would like to come to see me I will give him the information.

Mr. Andrew Faulds: On a point of order, Madam Speaker. May I draw to your attention the happy fact that, after 15 months, I am back in service?

Madam Speaker: It is a pleasure to see the hon. Gentleman back. I shall look for quality contributions from him in future.

Oral Answers to Questions — BILL PRESENTED

LICENSING (AMENDMENT) (SCOTLAND)

Mr. Secretary Forsyth, supported by Mr. Secretary Howard, Mr. Secretary Dorrell and Lord James Douglas-Hamilton, presented a Bill to amend the Licensing (Scotland) Act 1976 to enable licensing boards to make byelaws including licensing conditions relating to certain events involving music and dancing and to make new provision for the composition of licensing boards for licensing divisions: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 11.]

Oral Answers to Questions — DELEGATED LEGISLATION

Motion made, and Question put forthwith pursuant to Standing Order No. 101(4) (Standing Committees on Delegated Legislation),

That the Income-related Benefits Schemes and Social Security (Claims and Payments) (Miscellaneous Amendments) Regulations 1995 (S.I., 1995, No. 2303) be referred to a Standing Committee on Delegated Legislation.—[Mr. McLoughlin.]

Question agreed to.

Orders of the Day — WAYS AND MEANS

Order read for resuming debate on Question [29 November].

Orders of the Day — AMENDMENT OF THE LAW

Motion made, and Question proposed,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply, acquisition or importation otherwise than by—

(i) zero-rating or exempting supplies of goods which are, or are to be, subjected to a fiscal or other warehousing regime; or
(ii) zero-rating or exempting supplies of services on or in relation to such goods;

(b) for refunding any amount of tax otherwise than to persons constructing or converting buildings in cases where the construction or conversion is not in the course or furtherance of a business;
(c) for varying any rate at which that tax is at any time chargeable; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description—[Mr. Kenneth Clarke.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

Madam Speaker: I must tell the House that I have selected the amendment in the name of the Leader of the Opposition to the first Ways and Means motion. It may be convenient if at this stage I also announce that I have selected the amendment in the name of the Leader of the Opposition to the motion on public expenditure which is being debated together with the Budget resolutions.

The Deputy Prime Minister (Mr. Michael Heseltine): My right hon. and learned Friend the Chancellor of the Exchequer had three principal objectives in his Budget: first, to maintain the Government's determination to make this country the enterprise centre of Europe; secondly, to enhance still further the priority that we give to three vital public services—education, the health service and the battle against crime—while reducing overall public expenditure as a percentage of gross domestic product; and, thirdly, to pursue the Government's objective to allow people to keep more of their own money through a programme of significant tax cuts. I pay tribute to my right hon. and learned Friend for producing a Budget that achieved all three of those objectives. He has delivered a Budget that will get borrowing down, secure our reputation for governing responsibly and in the national interest, and continue to promote a sustainable, lasting recovery.
I referred to our determination to build in this country the enterprise centre of Europe. We have recognised as a Government—perhaps more frankly than any other Government—that over the past 100 years, our position as a trading nation, from about 1860 onwards, has been one of relative decline. As a Government, we inherited in 1979 an economy heading for still more serious decline—structurally unsound, grossly overmanned, seriously unproductive and ridden with industrial disputes. It was widely acknowledged that in 1979 this country was the sick man of Europe.
Today, we are among Europe's fastest growing economies. The United Kingdom grew faster than G7 average growth in 1993 and 1994, and we are set to do so again this year. The International Monetary Fund expects us to join Germany at the top of the G7 growth league in 1996. The Organisation for Economic Co-operation and Development has praised the change. Its survey of the UK noted:
the UK's sweeping structural reforms are yielding dividends in a more flexible, competitive, and less inflation prone economy.

Mr. D. N. Campbell-Savours: The Minister refers to sweeping structural reforms. Has he noted the sweeping structural reform in my constituency, where an American company, Campbell Soups—60 per cent. of its share capital is owned by one family—was able to take a decision which closed one of the most advanced food-producing plants in the country, owned by Home Pride, effectively wiping out 123 jobs at a stroke? Home Pride was profitable last year; it made £4 million. The entire food industry is outraged, and my constituency is outraged, yet the Government stand back and do nothing. Who is going to step in to stop such companies wrecking the local economy in my constituency? If the right hon. Gentleman has any honour, will he stand at the


Dispatch Box and join me in appealing to the British people to boycott the products of the company—Campbell soups and Fray Bentos corned beef—so that it knows that we will not stand aside and watch it wreck a constituency such as mine?

Mr. Dennis Skinner: So much for inward investment!

The Deputy Prime Minister: Of course I do not like unemployment being created in any constituency in any circumstance. I take the point made by the hon. Member for Workington (Mr. Campbell-Savours) seriously. Was he saying that a future Labour Government would become involved in preventing companies from closing down? Would a future Labour Government be prepared to offer subsidies to such a company? Is that one more—

Mr. Campbell-Savours: rose—

The Deputy Prime Minister: No, I will not give way. This is a question not for the hon. Gentleman, but for Front-Bench Members of his party. What faces us today is old Labour anticipating old demands that it will make to a future Labour Government. Perhaps the deputy leader of the Labour party will tell us how much money is tucked away in the coffers of a potential Labour Budget to save jobs in the circumstances that the hon. Gentleman has described.
I noticed another characteristic of old Labour when the hon. Member for Bolsover (Mr. Skinner) spoke against inward investment, cynically attacking one of the most successful aspects of the British economy.

Mr. Skinner: Why does the right hon. Gentleman not carry out his promise of a short time ago, when he talked at the Tory party conference about intervening before breakfast, before dinner and before tea? Why, in this respect, does he not intervene before the soup?

The Deputy Prime Minister: As the hon. Gentleman knows, I and my right hon. Friends have intervened time and again and the result has been that there have been more than 4,700 inward investments into this country which are creating or safeguarding 700,000 jobs. That is the sort of intervention in which we believe, creating an enterprise economy which is making us the most successful enterprise centre of Europe.
It is interesting that this is the new Labour party. At any sign of success, any inward investment by overseas companies or any decision to cause a redundancy, the Labour party is up in arms with indignation. There is nothing new about the Labour party. Labour Members are the oldest men and women, psychologically, in British politics.

Several hon. Members: rose—

The Deputy Prime Minister: There is no point in my giving way when the Labour party has given way to every intellectual argument that this party has paraded over the past 16 years. Labour Members—the whole lot of them—do not realise that they are intellectually flat on their backs.
The people of this country must make a decision. Do they want this country's economy to be judged by the standards of the Labour party, or by the standards of the men and women running the world's most successful international companies who, in the freedom they enjoy, are choosing to invest in this country—a country that the

Tories have made the most successful in Europe? Which is the right judgment? Should people choose Labour's restrictionism, which harks back to yesterday, or the Tory party's bringing the investment that will create prosperity and jobs tomorrow?

Mr. Ronnie Campbell: The Deputy Prime Minister closed the pits and put 30,000 miners out of a job. Why are new mines now being opened in the north-east of England? Why are companies opencasting half my county? Why is that happening when the right hon. Gentleman put 30,000 miners on the dole?

The Deputy Prime Minister: I took that most uncomfortable decision for the same reason as Labour Ministers took exactly the same decisions year after year after year, in the unhappy circumstances when they sat temporarily on the Treasury Bench. They took that decision—as I did—because the industry was uncompetitive. The reason why the hon. Member for Blyth Valley (Mr. Campbell) can point to the fact that new mines are being opened, new opportunities are being created and coal is being exported is that under the private sector, the coal industry is competitive. That is the transformation which has come about.

Mr. William Cash: Bearing in mind the fact that I voted against the coal proposals to which my right hon. Friend has referred, but moving further forward, does my right hon. Friend accept that the Labour party demonstrates its utter hypocrisy by continuing to cavil and complain about how we are running the economy, when the Labour party was behind the exchange rate mechanism and is in favour of further integration into monetary union? Will my right hon. Friend say here and now that the United Kingdom will never go back into an exchange rate mechanism? It is precisely because we are outside that system that we are now competitive and have all the growth to which my right hon. Friend has rightly referred.

The Deputy Prime Minister: Now that my hon. Friend has reminded me of the facts, I recall that he disagreed with me on the issue of the coal mines. But the day when my hon. Friend and I agree on all aspects of policy will be a day for the Tory party to rejoice from one end of the country to the other. I only suggest to my hon. Friend that he should use his considerable rhetorical skills not to attack the record of the Government but to attack the Labour party, which will otherwise take the place of the Government.

Several hon. Members: rose—

The Deputy Prime Minister: I think that it is only fair that the Opposition spokesmen should have a chance to speak in the debate, as opposed to allowing the whole thrust of Labour party policy to be dictated by its Back Benches.

Mrs. Ann Clwyd: Will the right hon. Gentleman give way?

The Deputy Prime Minister: I am being fair to the Labour party because I understand that it cannot make up its mind which way to vote tonight. Perhaps I should give Labour Members more chance to debate these matters between themselves. I will not give way to the hon. Member for Cynon Valley (Mrs. Clwyd); she will forgive me.


The fact is that international opinion and world commentators now praise the remarkable changes that have occurred in the British economy. To quote only one, the chairman of BMW said earlier this year:
structural change has made Britain by far the most attractive place to invest in Europe.
The fact is that the change is happening in manufacturing, the service industries and in the vital super-highway industries of tomorrow. The people who have to make the judgments upon which so many jobs and so much investment depends know that the British economy under the Conservatives offers the best tax climate, excellent industrial relations, low inflation and a climate of enterprise which the Government are systematically extending and expanding year after year.
There can be no clearer indication of the success of our policies—it is one that was at the heart of the Labour party's preoccupation—than the fact that unemployment has fallen by almost 750,000 over the past two and a half years. The United Kingdom now has more people in work than any other major European Union economy.
I shall expand on some aspects of the Government's continuing agenda of competitiveness, to which the Chancellor referred in his speech. I shall start with the deregulation initiative and the burdens on industry. After the outstanding work of the task forces, first under Lord Sainsbury and now under Francis Maude, far more than 1,000 regulatory provisions have been earmarked for repeal or amendment. Some 500 will have been dealt with by the end of this month, and many more are in the pipeline.
We are now saving companies hundreds of millions of pounds per annum, which of course feeds through into enhanced competitiveness, investment and jobs. Out of the hundreds of regulatory provisions, I shall give the House three examples. First, merely by simplifying the food temperature control regulations, the Government will have helped save industry about £40 million a year. Secondly, we have increased the proportion that charities can invest in equities from 50 to 75 per cent. On the charities' own estimates, that could increase their investment returns by some £200 million a year. Thirdly, the simplification of trade marks legislation is already generating savings of some £30 million a year.
I am pleased to announce today the progress that we have made on a major area of regulatory concern—bringing in greater joint working by the Inland Revenue, the Contributions Agency and Customs and Excise to make dealing with Government more straightforward and less burdensome for business. Anyone in business will know that every year, two heavy documents arrive, one explaining the tax system, the other explaining the national insurance contribution system: two systems, two organisations, two sets of inspectors, two documents.
Today, Peter Wyman, senior tax partner of Coopers and Lybrand and a member of Francis Maude's task force, has agreed to oversee and drive forward the project of joint working between the Inland Revenue and the Contributions Agency and to ensure that this delivers real early benefits to business. We are talking about concrete things that really matter to people who run businesses: like having just one initial audit visit covering both PAYE and national insurance; like a single telephone help line to deal with queries and to

cut out the duplication of paperwork. Peter Wyman will bring exactly the external experience and perspective that we need for this task.
I referred earlier to our inward investment. One third of all inward investment in Europe is now based here. Forty per cent. of all American and Japanese investment in Europe is here—world-class companies transforming management practices, our employment prospects, our research expertise and our export markets. This investment from overseas, together with very optimistic forecasts for domestic investment, is helping the transformation of our economic prospects. But there is more to it than that.

Mr. Ian Bruce: Does my right hon. Friend believe that if the Government were to sign a sweetheart deal with BT allowing it to compete against the new entrants into the cable market, we would get the information super-highway built quicker? Would that have the effect of cutting off inward investment from such companies?

The Deputy Prime Minister: I would be grateful if my hon. Friend would bear with me. I had it in mind to return to that subject a little later in my speech.
This is not just about our industrial and commercial base. Britain is being modernised and rebuilt in what will be seen in perspective as the greatest period of urban renaissance since the 19th century. None of this is luck; it is as a deliberate consequence of the strategies that the Government have pursued.
First, trade union reform and the privatisation of our nationalised industries played a critical part in restoring the wealth-creating ethos in this country. They have become established here despite the in-built resistance at every stage of the Labour party, which is characterised now only by its abject surrender on all those major issues of principle for which it fought so hard in the 1980s.

Mr. William O'Brien: Will the right hon. Gentleman give way?

The Deputy Prime Minister: No, we know into which Lobby the hon. Gentleman went all through the 1980s. We know the record.
The fact is that our reforms in the restructuring of our economy and the privatising of our industries have become so entrenched here that they are the subject of intense investigation across the world. There is virtually no country today that is not exploring and experimenting with the ideas that we developed in the 1980s. They are established here and admired across the world. The fact is that we are moving on to new ideas that again will become part of the world culture change.

Mr. Tony Marlow: Talking about new ideas, or perhaps rehashed old ideas, my right hon. Friend has been discussing regulation and competitiveness. I understand that there are one or two parties in the House—or even three—that have a proposal for a Scottish Parliament. What would that do for the competitiveness of industry and deregulation in Scotland? My right hon. Friend may intend to deal with that later, but if he does not, perhaps he could tell the House what he thinks about it.

The Deputy Prime Minister: It is difficult to be sure how much extra tax it would lead to because I would have


to know how much extra tax was going to be imposed by a future Labour Government across the national economy. As I understand the specifically Scottish dimension, the cost of an assembly in Scotland would be of the order of 3p. That, I think, is the tartan tax. That, broadly, would be the sort of cost that the people of Scotland would have to pay. The effect on inward investment in Scotland would be dramatic, but it would, of course, be hugely advantageous to England, Northern Ireland and Wales, because we would get the inward investment that socialism in Scotland would deter from going there. Those are the obvious consequences of a Scottish assembly, and that is why I do not expect to see it happen.
We are now pioneering further developments that will affect the culture of public and private sector co-operation on a world scale. The first of those is the progress and vast potential of the private finance initiative. The Chancellor of the Exchequer and the Secretary of State for the Environment made it clear last week that we will also be extending the reach of another Government innovation—challenge funding. In many ways, the cultural shift implied in challenge funding is among the most pervasive and ambitious of our proposals.
I well remember, 15-odd years ago, the hostility that greeted the concept of the urban development corporations, the enterprise zones and the urban grant. But once again, as in so many other areas where we have pioneered, others have been forced by events to follow the lead that we set. We have seen, and will see through regional challenge, city challenge and the fund for the single regeneration budget, billions of pounds of investment from the private sector being levered in by the stimulus of public money to regenerate and revitalise our inner cities.
No one who has any experience or understanding of east London, Tyneside, Clydeside, the Tees, Merseyside, inner Birmingham, central Manchester or Cardiff bay can question that it is Conservative policies which have transformed those formerly dispirited urban areas. They have done that by creating a genuine public-private partnership, which has added hugely to what the public sector could ever have been able to afford.
We have not just created a physical renaissance—we have changed the culture of co-operation at local level. We have forced the inward looking, self-serving local Labour authorities to work effectively in partnership with their local communities, which they have been elected to serve.
Challenge funding has brought the Government, local authorities, training and enterprise councils and the private sector together. Regional challenge involves the European Commission in the same process. As a consequence of such partnerships, those involved have overcome differences and worked together for the benefit of the entire community. In order to win the competition for challenge funds, local authorities must now consult and involve their local communities. They must talk to tenants, teachers, the police and the industrial and commercial communities as they develop their plans and their priorities.
That is the politics of progress. That is how one truly builds the concept of one nation in the most deprived parts of our country. That change has been brought about because the Government have changed the assumptions that local authorities can simply expect to use taxpayers' money to finance irresponsibility and dogma.
The Secretary of State for the Environment has now proposed an expansion of challenge funding in local authority capital programmes. Shortly, the President of the Board of Trade will announce the result of the competition for the £160 million available under the regional challenge, which we have run with European funds.

Mr. Terry Lewis: Bingo and scratch card economics again.

The Deputy Prime Minister: I cannot help but notice the continuing murmuring of anti-enterprise slogans from the Labour party. The most interesting thing about sitting on the Conservative Benches is to note that the only thing that ever excites the Labour party is yesterday's slogans. The more the leadership of the Labour party talks about new Labour, the quieter the Labour party becomes. The more it lapses into yesterday's jargon, the more hysterically reminiscent it becomes of the old Labour party I know and love. [Interruption.] I should have thought that with so much self-evident success, benefiting the Labour constituencies of this country—[Interruption.]

Madam Speaker: Order. I refer to Mr. Campbell. I will have some order now from the Opposition Front Bench below the Gangway.

The Deputy Prime Minister: I am referring to falling unemployment, which now creates derision among the Opposition. I am talking about inward investment in their constituencies and the hon. Member for Bolsover (Mr. Skinner) sneers. My right hon. Friends spend hour after hour trying to persuade companies to come here instead of the south of Ireland, Germany, Holland or anywhere else and all that we get from Opposition Members is sneering at the results that bring jobs to their constituencies.
That is characteristic of what we know about the Labour party. They are never happier than when they are talking Britain down. The Labour party has latched on to the 1995 world competitiveness report. It is a report in which Chile comes top for having corporate boards which safeguard proper practices and Peru is thought to be the second most likely country in the world to have a low inflation rate in the next 12 months, despite the fact that the present inflation forecast for Peru in 1995 is 20 per cent. To cap it all, it is a report in which public confidence in financial intermediaries in Colombia surpasses that in all G7 countries except Canada.
Not content with that piece of fantasy, the Opposition turn desperately to some of the OECD figures that the Government used in the competitiveness White Paper. The OECD figures do not help them enough, so what do they do? They stick Hong Kong and Singapore into the OECD league tables of GDP per head and select the position just above the United Kingdom in which to put them. They have no idea as to whether they should put them there, so they do whatever suits their political propaganda.
The Opposition are not comparing like statistics with like, but that does not matter. It may not fit the facts, but it serves the narrow, knocking purpose of the Labour party. They leap about and start crowing that the United Kingdom has apparently slipped from 13th position in 1979 to 16th now and when they include Hong Kong and Singapore, it is 18th. However, they overlook inconvenient facts, as they always do.


We might explore whether the Opposition are prepared to get rid of the unemployment benefits and the welfare benefits that we have here but do not exist in Singapore in order to raise the investment levels in Britain to those in Singapore. Perhaps that is new Labour policy, and that is how Britain's competitiveness is to improve, but we might be let into the secret this side of a general election campaign. Perhaps they have it in mind that people should live in conditions characteristic of those in some of the fastest growing economies of the far east. If they would be prepared to allow those housing conditions to exist here, people should be entitled to hear about it.

Mr. John Prescott: This is absurd.

The Deputy Prime Minister: I am not absurd; it is absurd that the Opposition are attempting to compare Britain with those two economies for their own narrow, selfish party purposes, although they were not included in the OECD figures.
Even if one were talking about the events of the 1980s and 1990s, and considering the countries that were included, in 1979 we were the sick man of Europe. Nobody seriously argues with that. I cannot believe that the Opposition would defend it; that would imply that they wanted to go back to it. They certainly would go back to it, but they do not want to imply that intention.
In 1979 we inherited the disasters of restrictive practices, rampant inflation and soaring debt. Thanks to that legacy I concede at once that we slipped to 19th place in 1981. I wholly fail to understand how anybody can imagine that in the immediate aftermath of the winter of discontent we could have seen anything other than the deterioration of the British economy. Where the whole game plan comes unstuck is that from 1981 onwards, we have worked painstakingly and steadily to right the effect of those years of decline. We have achieved something that the socialists opposite never achieved—real, lasting success. While Labour fiddles with statistics, we have been tackling the competition head on.

Mr. Prescott: It is not us who have been doing the fiddling, such as on the unemployment statistics.

The Deputy Prime Minister: Use the word "fiddle" and the deputy leader of the Opposition wakes up. That is his stock in trade, and he is expert at it. I suggest that he calms down because I shall be coming to the deputy leader in a few minutes. Give me a minute or two to deal with the facts before we get to the right hon. Gentleman.
Since 1981, we have seen a significant recovery in this country's status as a world economy because we have systematically put in place the conditions for competitiveness. Although Labour has changed its language, it has changed none of its instincts or ambitions. Labour in the end is the party of the producer, not the consumer. It is the party that will always serve the interests of organised labour as opposed to the interests of the market place. In the end, the Labour party will put its interests above those of the nation at large.
If anyone wants to understand how little Labour has changed and how little it understands of the responsibilities of government—and of how one does not fiddle in Government—consider the point raised by my

hon. Friend the Member for South Dorset (Mr. Bruce). The leader of the Labour party stitched up a deal with BT, which he announced with maximum publicity at the Labour party conference. If we in Government behaved like that, we would be in the courts for abusing our legal restraints. No wonder the right hon. Member for Sedgefield (Mr. Blair) has been spending his time ever since trying to persuade the cable companies, which we encouraged to invest billions in Britain, that he had not done a deal with BT. The right hon. Gentleman cannot have it both ways. Either he has done a deal with BT that no one in the Government could do within the constraints of the law, in which case the right hon. Gentleman does not have any idea of the responsibilities of government, or he has not done a deal—in which case he deceived the British people into believing that he did. With the Opposition, if votes are for sale the price is of no regard.
One of the responsibilities of my right hon. Friend the President of the Board of Trade is to preside over the regulatory climate and to operate, objectively and on advice, within the law. I have received a letter from the hon. Member for Sheffield, Central (Mr. Caborn), who is an Opposition spokesman and could find himself in a responsible position and required to study evidence and listen to advice, in taking a wholly analytical and detached view of problems put before him—for that is the job that the hon. Gentleman shadows. Before the hon. Member for Sheffield, Central received any independent advice or heard what the regulators had to say, he wrote to me:
Bskyb is abusing its market position by restricting consumer choice and disabling potential competitors.
I read in the newspapers that the deputy leader and the Leader of the Opposition ordered the hon. Member for Sheffield, Central to withdraw that letter. After all, what is the point of flying all the way to Australia to suck up to the executives of the Murdoch empire if one's official spokesman back home is trying to carve up one piece of that empire at the same time as one is trying to win votes in Australia? I will give Mr. Murdoch a simple word of advice. Before he listens to the organ grinder, he should keep his eye on the monkeys back home. Nothing shows more clearly what Labour would be like in power and that it has no idea of the responsibilities within which a Government must operate. Labour is not fit to govern.

Mr. Richard Caborn: rose—

The Deputy Prime Minister: Of course I will give way to the hon. Gentleman. I will get the letter.

Mr. Caborn: While the Deputy Prime Minister is getting the letter, I can tell him that legal advice was taken on the BT deal by the Select Committee. In fact, we took three sets of legal advice. We were told that the proposals in the Select Committee report were attainable, and that is what my right hon. Friend the Leader of the Opposition said.
I suggest that the right hon. Gentleman might do better in government if he did some of the things that he suggested when he was in opposition. I also suggest that if he revisited his book "Where There's a Will", he might gain more backbone to take on the Treasury—as he said that he intended—and that might be helpful in the future.

The Deputy Prime Minister: I am glad that I gave way. I read the Financial Times and—

Mr. Caborn: We have read the book.

The Deputy Prime Minister: If the hon. Gentleman had read my book, he would not have made such inane observations.
If the BT deal announced by the Leader of the Opposition in his bravura performance was real and of value, why is he now telling the cable industry, to quote the Financial Times—[Interruption.] I shall give way if anybody wants to tell me that what the Leader of the Opposition told the Financial Times is not true.
The Opposition cannot have it all ways. What the Leader of the Opposition said at the party conference was designed to give the impression of a deal that would change the world. What he said today to the cable companies "at a private meeting"—not on the platform at the Labour party conference, not at a great gathering of the Labour party and with no trade unionists there to check the minutes—was
that BT would only be allowed access to the market after 1998 if it presented a detailed programme for the construction of a nationwide "broad-band" cable network—the so-called information superhighway.

Mr. Caborn: That is what the Select Committee said.

The Deputy Prime Minister: We are talking not about what the Select Committee said, but about what the Leader of the Opposition tried to con the British people into believing at the Labour party conference. Obviously, he was trying to have it both ways. If the right hon. Gentleman had been in government, he would have been in the courts—and the Opposition know it.
The Budget debate has had the flavour of the old Labour party. One after another, Opposition Members have been demanding higher levels of public expenditure. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) wanted a community action programme. The hon. Member for Falkirk, West (Mr. Canavan) demanded investment in the construction industry. The hon. Member for Bradford, South (Mr. Sutcliffe) wanted —20 for the disabled. The hon. Member for Cambridge (Mrs. Campbell) wanted more family credit. The hon. Member for Edinburgh, Leith (Mr. Chisholm) wanted regional development agencies.
Opposition Members want policemen, money for roads, housing benefit, money for education, investment, money for lone parents and more overseas aid. Their wishes were all summed up by the hon. Member for North-East Derbyshire (Mr. Barnes) when he said:
Greater expenditure is justified in many areas."—[Official Report, 29 November 1995; Vol. 267, c. 1283.]
All that at 10p in the pound income tax!
I am not surprised that the hon. Member for Dunfermline, East (Mr. Brown) cannot answer the questions that have been put to him by my right hon. and learned Friend the Chancellor and other colleagues. One after the other they have intervened, but they have received no answers. Not only is the Labour party not fit to govern, but its sums do not add up.

Mr. A. J. Beith: Will the right hon. Gentleman answer a question that will be in the mind of a typical teacher in his constituency? "If I am to get £9 more a week out of the Budget, I would need a pay increase of 4 per cent. If I got a pay increase of 4 per cent., schools would not get another £848 million because

that entirely depends on the teachers' pay settlement being much lower. Which do I take?" Surely the same Budget cannot offer both.

The Deputy Prime Minister: The right hon. Gentleman is perfectly capable of understanding the Chancellor's language. My right hon. and learned Friend referred clearly to the average income rising by £9 a week next year. He said time and again that that increase takes into account a range of factors, such as wage settlements, bonuses and overtime earnings, which will vary as between companies, employees and industries. That is bound to be the position, and everybody understands it, but the fact is that we have a conflict: a shadow Labour Chancellor who cannot answer any of the questions, and a Labour party that is determined to try to seek increased expenditure in programme after programme.
I was interested to see a question that was tabled by the hon. Member for Edinburgh, South (Mr. Griffiths), which read:
To ask the Chancellor of the Exchequer what would be the cost in a full year of introducing a new 30 per cent. tax band on £3,000 of income above the basic rate band; and what would be the yield from introducing a 60 per cent. upper rate at a 40 per cent. rate limit of (a) £50,000, (b)£70,000 and (c)£100,000."—[Official Report, 2 November 1995; Vol. 265, c. 426.]
If that was an idle question from some relatively new and inexperienced Labour Back Bencher, I doubtless would do my best to draw that to the attention of the House, but it may not have quite the credibility that it has when it comes from a Labour Front Bench spokesman. What possible interest has a shadow Treasury spokesman of the parliamentary Labour party in asking the Treasury to calculate the product of a 60 per cent. upper rate tax band? Is it idle curiosity, or is it to help with the arithmetic? If it is the latter, it would help the shadow Chancellor to answer the questions, but at least we should know that this side of a general election campaign. [Interruption.] I read out the question. I did not get it wrong. [Interruption.] The hon. Gentleman is a Front Bench spokesman. [Interruption.] If I have revealed that I was not sure that the hon. Gentleman was a Treasury spokesman, have I revealed something else: that there is a split between hon. Members on the Opposition Front Bench—between the Treasury trying to keep expenditure down and some other departmental responsibility trying to find the money to pay for increased expenditure? I do not mind which way it is; all that I tell the people of this country is that the Labour party is planning a 60 per cent. tax rate and it is doing the calculations on that basis.
Of course, the Labour party may try to suggest that one is raising claims about its policy that cannot be substantiated, but in the real world its own party members are asking the same questions. I happened to notice what the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) said on the "Today" programme:
Gordon—
I would be more respectful if I was referring to the shadow Chancellor—
can say anything he likes if he thinks that is going to win the election. When Labour is in power they will be looking for other priorities apart from tax cuts".
I have to say, of course, that the hon. Lady is a young and enthusiastic Member of the Labour Back Benches, so perhaps again we can dismiss it as an isolated occasion, but I have always been interested in the old hands who


have been around a little longer, one of whom is our old friend the right hon. Member for Chesterfield (Mr. Benn), who was on the "Clive Anderson Talks Back" programme. [Interruption.] I understand that Labour Members do not want to hear it, but hear it they will, not just from me but from their right hon. Friend. Let me quote what he said:
The Labour Party doesn't want to cause trouble because we want to get this bunch of crooks out of Government." [Interruption.]
We can unite the Labour party on that. He goes on to say:
And that's absolutely right".
Now get the cheer ready, boys.
And then when we come to power, then you'll find the Labour Party is the same … party as it's always been.
So there we have it—a party determined to egg up expenditure at every moment; a shadow Chancellor refusing to answer any of the questions; a shadow spokesman asking for calculations of the product of 60p in the pound income tax; and the old hands of the Labour party saying, "Let them say what they like as long as we get into power, then we will revert to type."
I am not telling the Labour party anything that it does not know. It knows that the shadow Cabinet is torn apart by the traumas of the debate that is going on—the shadow Chancellor talking about 10p in the pound income tax.

Mr. Campbell-Savours: Hear, hear. That is a very good policy.

The Deputy Prime Minister: Well, the hon. Gentleman should go and tell the shadow Foreign Secretary that, because he blew his top when he first heard about it.

Mr. Campbell-Savours: No, he did not.

The Deputy Prime Minister: Yes, he did.
Shadow Chancellor talks about denying welfare payments to those people who do not present themselves for work.
The shadow Chancellor just did not tell his colleagues in advance, so the shadow Foreign Secretary flipped his lid when he was first told.
The only thing that can be said for the deputy leader of the Labour party is that, as no one ever tells him anything, he cannot be blamed if anything goes wrong. I do not want to give the House a misleading impression about the deputy Leader of the Labour party. I do not want to give the impression that just because no one talks to him they do not love him. It has become abundantly clear through the media of The Times that at least someone loves the deputy leader of the Labour party.
I was intrigued today to see that a young lady, Fleur Adcock, has written a little poem to the deputy leader. It reads:
In the dream I was kissing John Prescott—
or about to kiss him; our eyes had locked
and we were leaning avidly forward,
lips out-thrust, certain protuberances
under our clothing brushing each other's fronts,
when my mother saw us, and I woke up.
I must say, it was a merciful release for somebody.
We are back with the essence of a Budget which has left the Labour party floundering with a wholly inadequate response. It is a Budget which will deliver an

extra £9 a week to the average income in Britain. It is a Budget which has seen us pursue our priorities of extra expenditure on the health service, on education and on the police. It is a Budget which has seen us march on a journey which is intended to take us to our 20p in the pound tax rate. It has revealed, by the Labour party's abject inability to make up its mind which way to vote tonight, that it is a party of opposition and not fit to govern.

Mr. Peter Luff: On a point of order, Madam Speaker. I would appreciate your guidance on a matter of some importance before the right hon. Member for Kingston upon Hull, East (Mr. Prescott) rises to move the amendment on the motion on public expenditure. The amendment in the name of the leader of the Liberal party, which has not been selected, includes an honourable declaration of interest by the hon. Member for Gordon (Mr. Bruce). The amendment in the name of the leader of the Labour party includes a call to switch resources
to investment in transport from the cost of rail privatisation".
Would not it have been helpful if the right hon. Member for Kingston upon Hull, East had also declared his interest arising from his sponsorship by a rail union?

Madam Speaker: I have made my views known on this matter before and I shall not get further involved in it. The hon. Gentleman has raised such issues before, and I refer him to the Official Report.

Mr. John Prescott: I beg to move, as an amendment to the motion, in line 4, after `tax', insert
`other than in respect of value added tax on fuel and power for domestic or charity use'.
The amendment gives the House an opportunity to vote again on the issue of VAT on domestic fuel.
It was sad to listen to the Deputy Prime Minister today. I have much respect for the right hon. Gentleman. He has written a lot on many issues; I am in common accord with him on some, and in strong disagreement on others. But he rather treated the House to a speech that did not address the issue. It was more in accord with the circus than with a debate in the House of Commons. I am sad about that, because I believe that the right hon. Gentleman is capable of making a more serious speech about the important issues involved in the Budget. The Budget debate is one of the most important debates in which the House engages in discussing the nature of the economy and the prosperity of the country.
The Deputy Prime Minister is, in fact, more concerned with being the chief propagandist of the Tory party, an art in which he proved himself proficient today. We have heard of the fiddling of statistics from a Government who have fiddled the unemployment figures—among others—to such an extent that the responsibility for recording those figures has been taken from the Department for Education and Employment and given to the Central Statistical Office. At least they are now reported more honestly.
The right hon. Gentleman's speech was indeed a propaganda speech. It continued much of the argument that he advanced on this morning's "Today" programme,


when he spoke of the "sacrifice" that had to be made if we were to achieve the success to which he referred this afternoon. It is not a sacrifice made by millionaires such as the right hon. Gentleman, and the many other millionaires who have done very well under 16 years of Tory government. It is the low-paid—people who desperately need assistance—who have suffered, and have borne the heaviest tax burden.
I find it offensive that it is those who have made the decisions in Cabinet who have benefited from those decisions, while launching an attack on people who desperately need the protection of a minimum wage. That is little enough to expect when more and more people are being driven down into poverty pay. That is what has happened in the 16 years of this Tory Government, and it is a disgrace to the country.
Yes, a sacrifice has been made; but it has been made by the millions whom the Government have put out of work, often by deliberate acts of policy. Millions of low-paid people have been denied the protection of a minimum wage, and driven into poverty pay by exploitation.

Mr. Bob Dunn: Would the right hon. Gentleman be prepared, on behalf of his party, to guarantee jobs for those who become unemployed as a result of a minimum wage?

Mr. Prescott: I will not take any lectures from any Tory Member about the level of employment, but I give the hon. Gentleman this guarantee: we shall be committed to putting employment at the top of our list of objectives as a Labour Government. We believe that there are certain things that the current Government could do now to return more people to work, rather than allowing them to waste away on the dole. I am talking about real jobs, not the "skivvy" jobs offered by the Budget.
That is the challenge for us, and we readily accept it. I might add that it was a Labour Government who, after the war, produced full employment for the first time, despite the opposition of the Tory party of the day. That is a matter of record.

Mr. John Townend: If by some mischance the right hon. Gentleman manages to gain power, will he and his party bring back the national dock labour scheme, which ruined the port of Hull and turned it from the country's third port to its 15th? Hull is now recovering, and has doubled its trade since the Conservative party did away with the scheme.

Mr. Prescott: The hon. Gentleman is living in the past. Let me tell him what I would bring back: I would bring back a minimum wage, which would help an awful lot of employees in his shop who are earning very much less than that wage would be. Can the hon. Gentleman honestly say that those people are at least guaranteed the level of wages introduced by the Wage Councils Act? No, he cannot. He should look at his own business before he starts lecturing us about the conditions of people in jobs.
A week has gone by since the Chancellor announced the 18th Tory Budget. The common theme—this year's Budget is no exception—is that these are Budgets for recovery. Every Tory Chancellor has said at the Dispatch Box, "This is another Budget for recovery." Lord Howe said it in 1983; the right hon. Member for Kingston upon Thames (Mr. Lamont) said the same in 1992. According

to the Government, we are always recovering, but we can never quite shake off the illness from which the country has suffered over the past 16 years.
We have had time to study the Budget much more closely since it was announced last week, and we have had judgments from the media, economic experts, industry and hon. Members. It is clear from the general view that the Budget has failed to meet the needs of the nation. According to The Sun:
It was about as inspiring as a cold kipper.
The Daily Mail questioned:
Where's the magic?
The Daily Express announced:
It's too little, too late.
Those quotes are just from the Tory press, never mind anyone else. The CBI's welcome was distinctly lukewarm, and even senior members of the 1922 Committee are critical of the long-term failure to cut public expenditure and taxes even further. As most people have agreed, the Budget is the first step towards a grubby attempt to win the next general election.
After the biggest tax hike in history in 1992, what has the Chancellor done to redress the balance? What principles are behind his new tax policies? Are they honest? No, they are deliberately misleading. Are they sustainable? No, and they show no desire to secure a more prosperous economy and greater employment. Do they reward hard work and provide opportunity? Certainly not in terms of providing real jobs and training. Are they fair? No, they are not.

The Chancellor of the Exchequer (Mr. Kenneth Clarke): I am glad that the right hon. Gentleman has had a chance to study the Budget. Last week, I asked the shadow spokesman for Trade and Industry whether there was any tax reduction in the Budget that her party opposed. I asked her whether there was any spending ceiling in the Budget that her party would increase. She found those questions difficult, and was unable to answer either of them. The right hon. Gentleman says that he has studied the Budget. Which tax cuts does he propose to vote against, and on which services will he advocate more spending?

Mr. Prescott: We have made it very clear that we disagree with the Budget's general strategy. I am moving an amendment to reduce value added tax on fuel. That is an important step, and hon. Members disagreed with the Government and supported us on that matter. We will undoubtedly approach taxation in a fair way. The Government do not. For the past 16 years, they have followed an unfair and regressive tax system. That is why we shall be fundamentally different.
In the context of spending, we shall operate much more fairly the private finance initiative, which I was one of the first to advocate. [Interruption.] Conservative Members think they have discovered private finance initiatives, but when we spoke about them in the House, the Government constantly told us that we could not have them. The Chancellor will certainly confirm that. We disagree with the strategy, and we have made it clear that we disagree with the Government's taxation principles. We shall vote accordingly.
The Budget hides multitudinous unfairnesses. Some 5 million people on benefits will not share in the 1p in the pound tax cuts or the widening of the 20p band.


[Interruption.] The Deputy Prime Minister said that his objective and that of the Chancellor was to reduce the burden of taxation. I am afraid that is not the case, because it has been increased, even on the Chancellor's figures. The overall tax burden has increased, and the Chancellor agrees that people are £670 worse off than they were after the last Budget. By any measurement, that shows that, on their own criteria, the Government have failed to be fair on taxation.

Mr. Kenneth Clarke: The right hon. Gentleman is again drifting away from the point. He cannot just be against a Budget strategy but not against any of its measures. A Budget is a combination of tax reductions that allow people to keep more of what they earn and what they save, and a series of public spending judgments about how much will be spent on each service. It strikes a balance between the interests of allowing people to spend their own money and providing good-quality public services.
Is there any tax decision or spending decision in the Budget with which the right hon. Gentleman's party disagrees? If not, how can he oppose the Budget strategy? He is just saying that he does not have an opinion at all on the Budget's contents.

Mr. Prescott: I can well understand why the Chancellor of the Exchequer continually wants to explain his Budget: the rest of the country has certainly not understood it, and gives it the thumbs down. We have an entirely different strategy from the Chancellor. For example, the Government have made great play—he keeps talking about it—about the windfall tax that my right hon. Friend the Leader of the Opposition proposed, which they disagree with, but it is a proposal. We identify that extra tax with jobs, and we are entitled to do that.
We disagree with the judgment exercised by the Government in cutting the resources in the training sector, which is vital. We disagree with the judgment in respect of the reduction in public expenditure. We disagree with the Budget's fundamental drift and direction, and we are entitled to do that. We are called the Opposition at this stage, not the Government, and we are discussing the Government's proposals.
The Budget hides a multitude of unfairness. Five million people on benefits will get no share of the Government's 1p in the pound tax cut or of the wider 20p band, yet those people must still pay VAT on fuel. In Britain, deaths from hypothermia are much higher than in Scandinavian countries, where climates are colder. Today's cold weather reminds us that pensioners cannot afford to turn up their heating as easily as we can in the House of Commons.
It is a disgrace, and an indictment of the proposal in the Finance Bill to cut £30 million from the energy conservation budget, that that money could have been used to put people back to work in decent jobs, providing energy conservation so that pensioners could live with a little more heat and a little less insecurity. That is what we call jobs and social justice, where we meet the need for a real job and for people who are desperate simply to have the essential requirement of decent heat in winter. That is one clear example.
If the Chancellor really had some money to spare, would it not have been fairer to the old, the low-paid and the unemployed to cut VAT on fuel? That is what we will

offer the House the opportunity to do. Again, it might be the only tax reduction that has ever been forced on the Government, apart from last year's VAT cut, when the Government were prevented from putting up VAT on fuel. We will give the House the opportunity to do that again.
An awful lot of Conservative Members have made it clear that they support that. Why? Because they think that it is a more progressive way of tax than the regressive measures that identify much of the Government and Budget proposals.

Mr. Alex Salmond (Banff and Buchan): I agree wholeheartedly with the right hon. Gentleman on VAT on fuel, and I will join him in the Lobby this evening, but will he explain why, when the Scottish National party and its allies gave the House the same opportunity on 21 January this year, he and his colleagues abstained, calling it a cynical ploy? Why was it a cynical ploy in January and right tonight?

Mr. Prescott: The hon. Gentleman must make his own judgment on this matter. We have given the House an opportunity to vote, and we are the only party that is likely to achieve victory. If the SNP and other political parties join us, we will have achieved that objective, and many pensioners, people who are dependent on heat, will be very pleased that again the Labour party has led the way in making another tax reduction.

The Deputy Prime Minister: rose—

Mr. Prescott: Ah.

The Deputy Prime Minister: Why was it a cynical ploy in January and the whole Opposition strategy tonight?

Mr. Prescott: I keep getting an explanation as to why it should be. I stick to my argument, which is that we have put the case and given the House an opportunity to cut VAT from 8 per cent. to 5 per cent. As the House knows, we cannot reduce it any further than that, because of the requirement of European Community regulations. We will provide the House with that opportunity.
These Budget tax cuts are unfair, dishonest and typical of many of the Tory tax proposals: the more one has, the more one gets. These tax proposals give nothing to millions of people, but their tax burden keeps increasing. Despite what the Deputy Prime Minister has said, the burden has increased from 34.7 per cent. of gross domestic product to 36.5 per cent. this year. Does he accept that figure? I assume that he does—they are the Government's figures. He suggests that the Government's objective is to reduce the overall tax burden, but nothing in the Budget reduces that burden. Even on the Chancellor's projections, it increases the burden.

Mr. Nigel Forman: What did the Leader of the Opposition mean when he told the CBI recently that, under a Labour Government, there would be no return to the old penal rates of taxation, such as 80 per cent? Did he mean a return to 70 per cent. or 60 per cent?

Mr. Prescott: We have made it clear that we will not return to penal rates of taxation. The hon. Gentleman has a reputation as someone who is concerned about the less fortunate in our society. Perhaps he should concern


himself with the penal rates that affect people on welfare—if they take work, an 80 or 90 per cent. penalty is imposed on them. I wish that as much attention was paid to that problem as Conservative Members pay to penal rates or the top rate of tax.
We will make a judgment on the different levels of tax rates at the appropriate time. My right hon. Friend has taken an important step forward by stating our policy on the lower end of rates. I understand that Conservative Members are arguing whether 10p or 15p is practical. It is certainly practical in other countries. It is an important step towards measurable wealth which will help us to find the best ways to get people from welfare into work. It is an important point, and I shall deal with it in more detail later.

Mr. Marlow: Are the right hon. Gentleman and his party considering at some stage increasing the top rate of tax from 40 per cent? If so, what parameters is he thinking about?

Mr. Prescott: We will make a decision about that level of tax at the appropriate time. It is fair to assume that there will be another Budget before the general election, and I do not know what the Chancellor will include in it. We have an obligation to make clear, at the appropriate time, our precise approach to taxation at all levels of income.
What characterises this Budget is that the Chancellor gives with one hand while he takes away with the other. Council tax, car tax, petrol tax and cigarette tax are all going up—while for a few top earners there will be huge pay increases. They will be hundreds of pounds better off, yet the average family will be £670 a year worse off than they were at the last general election—and that is before the rise in council tax is taken into account. As many of my hon. Friends have said, it is a 7p up, 1 p down Budget. It is unfair, regressive and a flop.

Mr. Michael Fabricant: rose—

Mr. Prescott: I do not have much time, and I have given way a number of times already.
At the end of the Budget speech, the Chancellor boasted that it would put Britain on course to becoming the enterprise centre of Europe—a soundbite if ever I recognised one. On what basis does he claim that, when the public sector borrowing requirement will be £29 billion—£6.5 billion higher than the right hon. and learned Gentleman predicted a year ago? I am worried by the Chancellor's promises, because every time we have measured his promises against reality, he has been way off target. The PSBR is an example of that.
The PSBR is going up, inflation is rising, growth is slowing down, and the balance of payments is deteriorating despite a massive 25 per cent. devaluation. The Government have made great play about Labour Governments and devaluation, yet they introduced a 25 per cent. devaluation in one go, and then claimed the credit for the increase in exports.
With such a devaluation, there should have been a trade surplus—but that has not happened under this Tory Government. Instead, there is an increasing deficit in the balance of trade. It is the slowest investment recovery from any recession this century. Investment in manufacturing—that crucial area of wealth creation

—is 20 per cent. lower than it was in 1979, and it is falling as a proportion of gross domestic product. It is a catalogue of failure.
The Deputy Prime Minister made great play about the world prosperity league. The right hon. Gentleman's own report, "Competitiveness: Forging Ahead", published this year, contains a table showing that Hong Kong and Singapore have overtaken Britain. The right hon. Gentleman suggested that Hong Kong and Singapore had done well because they did not provide the sort of unemployment benefits or housing programme that Britain provides.
Will he tell me which of the following countries—they are all ahead of us in the prosperity league—do not have unemployment benefit or a housing programme: Luxembourg, United States of America, Switzerland, Japan, Belgium, Norway, Denmark, Canada, Iceland, Austria, France, Germany, Italy, the Netherlands and Australia? All those countries have done better than Britain. Will he tell us which one of those countries does not have a housing programme or does not pay unemployment benefit? Can he tell us that, or was he mistaken in his remarks?

The Deputy Prime Minister: I was talking about Singapore and Hong Kong.

Mr. Prescott: The right hon. Gentleman was talking about those countries that had done better than Britain, and he suggested that Singapore and Hong Kong had done better because they did not pay unemployment benefit or have a housing programme. I do not know whether he reads his Department's publications. Obviously not: otherwise, he would know that all the countries I mentioned have done better than Britain. It is nonsense for him to suggest that that has anything to do with benefits or the social costs involved in providing decent housing.
Another interesting fact is that almost all those countries have a minimum wage. Why have they done better than Britain when the Government say that a minimum wage would be a problem for our economy? The people who make that claim should face facts. Most of those countries have a minimum wage, but they do far better than Britain in the world prosperity league. Does the right hon. Gentleman look at the evidence and take it into account, or does he just ignore it? A few years ago, the right hon. Gentleman used to believe in a minimum wage. He has changed his mind. However, the principle is still right, even if he has moved away from it.
As well as the world prosperity league, we should study what the OECD has said—an organisation that the right hon. Gentleman claims has said Britain is doing well. I accept that it has said some good things, but it has also said some bad things. It, too, has leagues, and they show that employment in Britain is lower than it was in 1979, that Britain has plunged to 21st in the investment league, to 24th in the skills league, and to 35th in the world education league.
Those figures show the total and chronic failure by the Government to provide the essentials to make Britain a prosperous country. That is why Britain is falling down the leagues: we do not train our people sufficiently, and we do not give them a good enough education. We do not invest sufficiently in our industries. All that has happened while the Government have been in power, and it has contributed to our dismal fall from 13th to 18th in the world prosperity league.


In addition, most of that happened while the Deputy Prime Minister, in previous jobs, has been in charge of competitiveness. He has been in charge of that area of policy over the past five or six years, but it has been nothing but a dismal failure. I do not know whether the fact that he is Deputy Prime Minister will make any difference. Perhaps he can now take on the Treasury. We hope that Britain's position will improve, but our judgment is that the Budget will not do anything to bring that about.
The international tables are clear proof of the long-term failure of Tory economic policy, yet the Chancellor thinks that it will put Britain on course to be the enterprise centre of Europe. What will the Budget do to reverse Britain's decline? Nothing. All it has done is give us new theories and new targets.
In the 1980s, we were plagued by the theories of Friedman and the money supply—now generally discredited. Now we have the target of reducing public sector expenditure to below 40 per cent. of GDP. We are told that, if only that can be achieved, we will have the self-sustaining, non-inflationary growth the Government talk about continually. Do they not realise that it is not just how much they spend, but where they spend it? Labour spent money on investment and kept people in work. There were fewer than 1 million unemployed when the Government took office.
It is sheer arrogance for the Government to say constantly that somehow they have improved the employment situation—the number of unemployed people has risen from 1 million to 2.5 million, even by the fiddled figures. If the Government remain in power, there is the possibility that we will go into the next century with more than 2 million people unemployed. That is not only morally unacceptable, but creates massive problems with public finances which we are now trying to address. We are identifying the problems of failure.
We have to make it clear that the Tories—apparently spend more on keeping people out of work than using it to get them back to work. That is one of the essential differences between the Labour party and the Tories. They have cut public investment and increased public consumption—despite the enormous opportunities for investment. In the history of this country, no Government have ever been blessed with more resources in such a short period—from the £100 billion that they have taken from North sea oil to the £120 billion from privatising nationalised industries at a knockdown price.
That money has largely been wasted on keeping people on the dole. No Government in our history have had such resources, or, indeed, ever had such an opportunity to do something about fundamentally changing the relationship between investment and consumption to achieve greater prosperity in this country. That has always been our case, and the problem which we have always tried to address. It is not easy to deal with politically—I readily accept that—but, with such vast resources, the Government had an opportunity to make that change. No other Government would have squandered those resources like this Tory Government.
As last year's excellent report on manufacturing competitiveness by the Select Committee on Trade and Industry—chaired by my hon. Friend the Member for

Sheffield, Central (Mr. Caborn)—said, investment is the key. The Committee catalogued the decline in manufacturing, which it said was due to the lowest levels of investment, training, qualifications and skills among our people. It pointed out where the failures lie.
If one reads the report's conclusions and looks at what this Budget—and the one before—have done, one sees that it has made no recommendations along the lines of those suggested by the Committee designed to deal with problems in reversing the decline in our manufacturing industry. The Government have ignored the Committee's recommendations. We have to invest if we want the economy to grow. That is the crucial variable in every successful economy which one studies. We need long-term investment in capital, infrastructure and people.
In Germany, Japan, the United States and any other major competitor country, investment, with an industrial strategy, is the key to economic prosperity. Why should industrial strategy be considered an ideological difference between the parties in Britain, when Governments of the left and right in various successful countries have managed to deploy a proper role for Government in developing one?
Indeed, the right hon. Gentleman who is now the Deputy Prime Minister has often advocated the case for such a strategy. I thought that he was right to do so, and I wait to see whether he is successful in his new job in challenging the rather short-term view of the Treasury which has often dictated matters.

Mr. Fabricant: Will the right hon. Gentleman give way?

Mr. Prescott: No.
Such a strategy is also the key in the Asian tiger economies, about which the Chancellor and the Prime Minister often talk, and on which the Deputy Prime Minister is so keen. In those economies, public and private finances work together in partnership, and the Government have a proper role to play. That is true of Singapore, as it is of Hong Kong. Any visitor to those countries notes that their deserved prosperity is as much to do with public as private investment. That is also true in Italy and Norway and a number of other European countries, because they invest more in capital and people. It is about not simply wages, but skills and productivity.
It is a mistake to suppose that the inward investors of whom we hear so much, and whom we welcome, come to Britain to take advantage of low wage rates or to dodge the social chapter. That is just not true. If that were the case, why has three times more investment left this country than come into it in the 16 years of Tory government? Of course, in a global economy, money flows in and out, but one cannot make the judgment that the money coming into this country is doing so simply because of cheap wages, and that the money leaving countries is because their wage levels are usually higher than ours. One cannot assume that that is somehow an indictment, and that we must therefore aim for the lowest costs with lower wages, and get rid of the social chapter. Such conditions have often been present in the countries where the money has gone.
Inward investors come to Britain because of the international advantage, and we should recognise that. Such an advantage is often down to our language


—a common language and culture. Of course, we are also close to Europe. Those are the reasons why companies invest in this country.

r. Fabricant: On that very point, will the right hon. Gentleman give way?

Mr. Prescott: indicated assent.

Mr. Fabricant: That demonstrates that persistence pays off. I am grateful to the right hon. Gentleman for giving way. Does he think that one of the reasons—just one—why companies invest in this country is that we have the lowest rate of corporation tax? While we are at it, does he support the 1p reduction in income tax, given that a year ago he said that he would not support the Labour party if it were ever to go down the road of cutting income tax?

Mr. Prescott: I thought that the Whips gave out only one question, not two. I shall deal with the first one. Again, if one looks at the OECD figures and the levels of taxation, whether corporation or personal, one sees that no common criteria produce a successful result. In some countries, conditions are very different. From the evidence, one can see that even those countries with high corporation tax have done better in getting more people back to work and attracting more investment. In some cases, low taxation has had that effect. [Interruption.] I suggest that the hon. Gentleman looks at the OECD figures—

Mr. Fabricant: I have.

Mr. Prescott: I am afraid that he has not looked very carefully—

Mr. Fabricant: I have.

Madam Deputy Speaker (Dame Janet Fookes): Order. I deplore seated interventions, especially given the fact that the hon. Member for Mid-Staffordshire (Mr. Fabricant) has already been allowed to make certain interventions quite properly.

Mr. Prescott: Basically, investors come here because of the access to markets, especially Europe. Of course, the devaluation of the pound by 25 per cent. has been attractive too.
Investors come, and they are welcome, but we cannot rely only on inward investment for future growth. We have to boost the indigenous investment—that is another thing that the Budget has failed to do. It has failed to provide any additional incentive for private investment in manufacturing. Industry has made that absolutely clear. Indeed, my hon. Friend the Member for Dunfermline, East (Mr. Brown) has made it clear that we would do more on allowances. Again, there is disagreement between the parties on the allowances that investors get against tax, but at least we argue the case.
The Budget has certainly failed to provide any additional incentive for small and medium firms. They clearly do not think that there has been much in the Budget to help them. There has not been any additional incentive for private investment in plant, training and public investment, on which much of the private sector is dependent, especially in construction and manufacturing. It is often not understood, and rather unfortunate, that much private investment is very much dependent on public sector investment, whether in housing or in various other industries. It is very important for manufacturing companies.
Yet the Government have been pursuing cuts in public expenditure—by 6 per cent. this year and 11 per cent. for 1996. It is hardly a Budget for investment. Given that investment is crucial to the development of prosperity and to moving up that league of prosperity, the Budget had to be designed to deal with investment. Frankly, it failed to do so.
The only argument given by the Government is that of the private finance initiative. We have heard it in every Budget since the Tories stumbled on the idea. I have spent a number of years at the Dispatch Box opposite various Chancellors and Secretaries of State for Transport arguing that there was a role for a private finance initiative—indeed, a very good role. I think that the Chancellor concedes that. I wish him well, so that public and private finance meet in investment.
Such investment should be in addition, but the Government's problem is that such investment often hides cuts in public expenditure; it is used as a smokescreen. It is often suggested that extra money through private finance will replace cuts in public expenditure, but, frankly, that does not happen. The Chancellor knows that to be true; the figures are very clear on it. Nevertheless, the idea is sound—it should be: it came from the Labour party. But the Government have ruined it through incompetence, sheer ignorance and blind ideological prejudice.
On transport, it was Labour's plan to bring public-private leasing into British Rail that forced the Government into a £150 million leasing deal two years ago. It was in our manifesto, after all. The Chancellor must have read it at the time. It was a good idea. They used to tell me that it could not be done. Yes, it was a leasing agreement, but leasing deals can be involved in private finance. We showed them that it could be done, but now it has been ruined. The whole process is being undermined by a Treasury still wedded to arcane principles and run by people who do not understand what they are doing.
I know that the Chancellor has sent a number of his civil servants away for training and education to break the cultural logjam in attitude, and I wish him well. That is absolutely right. Indeed, it was one of the recommendations made by my hon. Friend the Member for Dunfermline, East and myself on changes in private finance.
The Economist said that the Government's proposals were a "dog's breakfast". The PFI has replaced actual investment with expressions of intent. We have seen the growth of the PFI in the Government's wish list—from 78 projects in 1993 to 1,500 today, worth almost £27 billion. But only 64 of those projects have been completed, and less than £500 million of private finance has been levered into public investment. The private finance initiative has been a smokescreen for the Treasury, behind which it can cut hundreds of millions from public investment, which is set to be cut by a further 18 per cent. over the next three years.

Mr. Bernard Jenkin: The right hon. Gentleman has made many disparaging references to cuts in public expenditure. He has also said that he fundamentally questions the whole Budget judgment. In the view of the Labour party, what percentage of gross domestic product is it appropriate for the Government to take?

Mr. Prescott: At the time of the general election, the hon. Gentleman promised that the Government would cut taxes. I do not know how he answers that point now. The quality of public expenditure is as important as the quantity. We suggest that, instead of wasting money on keeping people on the dole—about £20 billion—we should use it to put people back to work. I will come back to that point in a second.
The real point about private finance is that our transport infrastructure is crumbling and our construction industry is on its knees. Our businesses are not getting proper access to the markets in the United Kingdom and abroad. The Birmingham northern relief road should have been built in 1992. It has been delayed, and is still not being built, despite all the arguments about private finance.
Good, modern railway works in York were closed down, simply because the Treasury would not approve any more leasing agreements, which would have enabled the carriage works to produce the trains. Yet more than 50 per cent. of the trains on Network SouthEast are over 25 years old. The leasing agreements were a simple way in which to finance new trains, which would have kept people in work instead of putting them on the dole. If people are in work, they can pay taxes and contribute to providing other services. That is the question we face today.
The east coast main line is more modern than the west coast main line, which is falling down, because it has had the investment. When the Chancellor and I were walking to another place, I said to him that, yet again, there was a Bill on the channel tunnel rail link. There has been a Bill on the channel tunnel rail link every year since 1986. Why is that? It is purely because the Government could not deal with the problems involved in financing the link.
The Secretary of State for Transport at that time, Lord Parkinson, told us that the link would not be built if the Government could not find private money, yet he is leading one of the consortiums bidding for about £2 billion of taxpayers' money to pay for the link. In the meantime, we have lost the benefits that come from a modern transport infrastructure.
That kind of disaster has plagued Britain in dealing with these matters, and one hopes that there will be a sensible compromise on the problems, with which I know the Chancellor is dealing. The issue is how we deal with sharing the risk between the public and private sectors. I had intended to say more about that, but time prevents me from doing so. It is an important question, and unless we solve the problem, we shall not be able to unlock the tremendous amount of private funds that are available to help us build the infrastructure. The infrastructure must be modernised, so that our regions can compete as they desperately need to do.
Regions are important, yet they are not mentioned in the Budget statement. We need to expand investment in training, jobs and regional economic development. We believe that that can be done, and that public and private finance can play their part. The release of local authority housing receipts must be a classic way in which to release funds. The Government admit that £4 billion or £5 billion is still held in the accounts.
We are paying about £2 billion to keep a quarter of a million building workers on the dole. We have record levels of homelessness. Why can we not release people from the dole, provide jobs, train our youngsters in

apprenticeships, and meet the requirements of jobs and social justice? That is what we think needs to be done. Construction jobs are real jobs—one can give many more examples.
The Government's only contribution to employment has been to propose the workfare scheme. This is the Government who told us in 1979 that Labour was not working. Unemployment has now grown to 2.5 million even on the Government's fiddled figures, yet all they offer is a workfare scheme. That came about as a panic measure. After the Budget was received badly, the Chancellor and the Deputy Prime Minister went on an assault over the weekend to improve people's attitude toward the Budget.
There were two proposals. The first was workfare—chain gangs—which does not mean proper jobs. There will be no education, no training and no connection with the real jobs my hon. Friend the Member for Dunfermline, East talked about when introducing our welfare-to-work proposals. The Government are forcing people to depend on the welfare services.
There was a second element in the assault this weekend on people's attitudes to the Budget. Can the Deputy Prime Minister answer this question, once and for all? He has been asked this before, and I have written to him to this effect. Is it a fact that people will be £9 better off as a result of the Budget? If so, does the figure include a 4 per cent. rise in earnings? Are the Government calculating that there will be a 4 per cent. increase in earnings next year in reaching the figure of £9?
Can the Deputy Prime Minister tell us? If he will not tell us, I assume that that must be the case. The Government are now telling us that they have a 4 per cent. wage policy; no doubt that will be noted. Is that what the Deputy Prime Minister wants? Is that what he is saying? The House and the country will note that the Deputy Prime Minister has no intention of doing anything.

Mr. Kenneth Clarke: I was going to save the answer for my winding-up speech, but there is little else for me to answer, as the right hon. Gentleman has not yet mentioned one measure in the Budget with which he disagrees.
The figure of £450 a year better off next year is the usual figure that is given if one asks the Treasury to make assumptions about the growth of the economy, about inflation, about earnings and about the effect of all the Budget changes. That includes changes that mean that tax goes up, such as the increase in tax on tobacco, and those that mean that taxes go down, such as the reduction in income tax. Every year, the Opposition ask the Government those questions, and the Treasury answers the questions on the basis of those assumptions.
The answer this year is the best forecast that could be made for next year. The average family will be £9 a week better off as a result of our best forecast of the economy and the Budget measures next year. That is what I said when introducing the Budget. The right hon. Member for Kingston upon Hull, East (Mr. Prescott) is deliberately misusing the figure and claiming that I said that there would be a £9 a week reduction in taxation. I did not say that. I talked about what matters to people—the money in their pockets, and the extent to which they are benefiting from the economy's recovery.

Mr. Prescott: It is very clear that the figure means that there will be a 4 per cent. increase in earnings. The Chancellor has not rejected that argument—indeed, all his arguments take that point into account. We have deduced from his figures what the tax reductions will be and what their effect will be on the average family. When we deduct that from the effects of the other changes, it is clear that the figure of £9 a week assumes an increase in wages of 4 per cent.

Mr. Clarke: indicated dissent.

Mr. Prescott: I do not think that anyone denies that. Let the House make a judgment about it. The figure includes that 4 per cent. I do not know what that will do for the Government's education proposals, although the Chancellor says that there will be improvements in education. I do not know what that will do for improvements in the health service. The Chancellor now tells us that the figure is an estimate.

Mr. Clarke: The right hon. Gentleman says that the figure is not good enough. What tax changes would the right hon. Gentleman make? This whole nonsense is based on an assumption that the Labour party has an opinion, one way or the other, about the changes we made in personal taxation. This is not a difficult question for a shadow Government. Is the Labour party in favour of the changes we have made to personal taxation, is it against the changes, or do Labour Members not have an idea in their heads except when a soundbite is given to them by the hon. Member for Hartlepool (Mr. Mandelson)?

Mr. Prescott: "Now you see it, now you don't." The House will make a judgment, and I shall move on. The 4 per cent. wage increase is clearly implied in the figure, and people will no doubt take that into account.
Our main indictment of the Budget is that there is no industrial strategy, no regional strategy, no training strategy, no investment strategy and no growth strategy. This is not a Budget for enterprise, as the Chancellor says it is: it is a Budget for continuing failure. It is a Budget of a busted flush Government who are led by a weak Prime Minister, a has-been, hop-along Deputy Prime Minister, who gave us some examples of his approach today, and an inadequate Chancellor. The Government have no idea what they want for our country. The sooner they are gone, the whole rotten lot of them, the better it will be for Britain.

Mr. David Howell: If there was an entire alternative strategy buried in the speech we have just heard, it was buried very deep and with many layers of verbiage above it. We shall have to do a lot of digging to discover the alternative strategy. Although the right hon. Member for Kingston upon Hull, East (Mr. Prescott) recognised and, I think, understood some of the points about the private finance initiative, it is regrettable that he did not give one word of acknowledgement—he gave one small word—to the amazing story which my right hon. Friend the Deputy Prime Minister described as unfolding in the United Kingdom. The story can be summed up in one sentence: all around the world, people do not regard the United Kingdom as the catastrophic failure that the right hon. Member for Kingston upon Hull, East and his friends describe; they regard it as an outstanding success.
Those people from around the world do not use mere words, they act. If one talks to those people, they say that they want to put their factories here, and they do so on a colossal scale—more than in any other country in Europe. That activity is not slowing down but increasing. Those people want to put their funds here for management. The entire savings of Asia, from where the funds will come, are increasingly managed and recycled through the financial services industry of London, which dominates the whole world. I declare an interest here because I advise those people. They want to educate their children here because the United Kingdom is a brilliant exporter of educational services. They want to buy houses here, and they are crowding in to do so, which accounts for some of the vagaries of the housing market, particularly at the upper end. They want to keep their personal funds here 
If those people want to do all that and regard Britain as such a successful place, above all other countries in the world, why does the right hon. Member for Kingston upon Hull, East and his colleagues need to keep coming back to the failure theme? That is a naive question in a sense. They belong to the Opposition, and they want to dig out the failure. They want to turf out my party. I understand that motivation because I remember being in Opposition, and that is what one spends a lot of time doing.
The story is not plausible, however, if one leaves out half the theme which my right hon. Friend the Deputy Prime Minister set out this afternoon. Opposition Members have left out another, major element of the story. Not only is the United Kingdom the magnet for inward investment on a massive scale, which brings in hundreds of thousands of jobs, but we are—there is nothing to be ashamed of in this, although it may offend old Labour doctrines—one of the world's largest outward investors. We place assets around the world on a colossal scale, which in turn brings back such large invisible earnings to this country that they exceed our entire earnings from manufactured exports.
Around the world, we have about £600 million of portfolio investments, £300 billion to £400 billion of direct investment and another £700 million of loans to foreign residents, which means that our total overseas assets are worth about £1,400 billion to £1,500 billion. The right hon. Member for Kingston upon Hull, East asked where the money from North sea oil has gone, and where the money from this and the money from that have gone. The money about which he is talking is a small amount compared to the colossal investment and inward flow of funds back into this country. In turn, that inward investment enables us not only to finance our present investment in the United Kingdom and our falling levels of unemployment but to continue to finance our undoubtedly expensive system of welfare and universal provision, which, like every other country, we are rightly worried about because it is such a burden on the budget.
The right hon. Gentleman made a speech about the Budget and the economy and he left out those gigantic elements in the story, which are the ones that determine where we trade. It is overseas investment that opens up trade nowadays. Trade does not follow the flag; trade follows investment. We put in the investment first, and then we put the goods into those markets. That is the story of jobs and investment in this country, and that is the story of our success. Although the right hon. Gentleman may not to give that aspect of the story the acknowledgement


that it deserves, because he wants to set up a critical position, to leave out that aspect altogether leaves one with an absurd, empty husk of a speech. His case will not stand up and it looks ridiculous.
I ask the right hon. Gentleman and his colleagues, even if they will not speak in glowing terms—I understand that—at least to study what is going on in this country and what is happening to the economy. That would be the first move towards any claim that they may have to be a responsible Opposition, let alone a responsible Government.
I should like to return from that sad story of not understanding what is happening in the British economy to one or two specific aspects of the Budget and my right hon. Friend the Deputy Prime Minister's presentation on it.

Dr. Jeremy Bray: The right hon. Gentleman has presented an oversimplified picture. Can he give us the net figures for inward and outward investment and tell us what has happened to our net foreign assets?

Mr. Howell: The net figures are obviously very different. We are outward investors and inward investors. Just as for net exports and imports of physical goods, the figures for exports are smaller. Nevertheless, we are a substantial net earner of invisible earnings. That offsets any export deficit that we may have had in the past. The picture is rapidly changing, particularly in our trade with Asia. As the hon. Gentleman knows, we now have an export surplus of physical exports to the tiger countries and we have recently achieved a surplus of such exports to Japan. So there, too, the story is changing radically. It is about time that that was recognised by someone on the Opposition Benches.
I wish to deal with three aspects of the expenditure and taxation plans of my right hon. and learned Friend the Chancellor. I am afraid that, having reinforced the strong case that my right hon. Friends have made, I now wish to strike a mildly critical note on an expenditure matter. My right hon. Friend the Deputy Prime Minister asked the Opposition whether there was any policy area on which they thought that expenditure should be higher. Nothing was forthcoming. I believe that a mistake has been made in one policy area. It is rather small, but it is at the cutting edge of our world effort. I refer to the cuts proposed in the budget of the British Council.
The Government propose to cut the British Council's budget by 17 per cent., or about £22 million in today's money. That is a devastating cut in the work of that agency. I do not know whether the same cuts are to be imposed on the BBC World Service, which is the other major arm of cultural diplomacy. I do not have the figures, but perhaps we could learn them from my right hon. and hon. Friends.
I wonder whether the Government's action is the right way to go about cuts or whether we have a touch of the slash and burn which my right hon. and learned Friend the Chancellor said that we should not have. The cultural diplomacy effort of the British Council creates the climate that enables British investment to go overseas and British goods to go after it. It creates the attractive nature of Britain that makes everyone want to invest here. Yet we have seen the same slicing of the small agencies of the

British Council and the World Service, which are highly effective, as has been applied to much bigger operations such as defence and other aspects of our overseas effort.
The Government may say, "Fair is fair. Everything has to be chopped off together." I wonder whether that is right. The World Service and the British Council are the spearhead of today's foreign policy effort. If the Government have to make a shorter spear, why cut off the tip as well as the tail? It cannot be right. Although I do not ask that more money be found from nowhere, I ask my right hon. and hon. Friends to go back to their colleagues who have responsibility for foreign policy, defence, the diplomatic wing, the agencies and overseas aid and consult on whether it was right to slash the British Council budget. I know that there must also be restraint in overseas aid. That is probably right. We need an entirely new approach to aid and development nowadays.
I have made a criticism. One may say that it is a plea for more spending unless I suggest some alternatives—which I can do. I make the criticism with the strong feeling, which many of my right hon. and hon. Friends share and which has been aired in the Foreign and Commonwealth Affairs Select Committee, that the British Council and the World Service are the cutting edge of British success and interest in the world and we slash them at our peril.

Mr. Matthew Banks: Why does my right hon. Friend believe that we ought to have a fundamental change in the way in which we deal with our overseas aid programme? The United Kingdom programme is one of the finest in the world. It is not only quantity but quality that count.

Mr. Howell: My hon. Friend tempts me to make a much longer speech than I wish. We have reached the point in the post-war doctrines of donors and aid at which it is realised that aid does not necessarily equal development. Merely calling for more aid, in particular more Government-to-Government aid, does not lead to the processes of development which are hoped for. Sir William Ryrie, who has been with the International Finance Corporation for some years, has written a book on the subject which I commend to my hon. Friend. It brings home the message that, if we are to make our aid budget smaller or limit its size, that ought to go hand in hand with implementing the policies that are necessary to achieve development. It is time that the whole aid policy was reviewed. That is happening in the United States, Japan and France and I hope that it is happening in Britain. Perhaps my right hon. and noble Friend Baroness Chalker will be able to tell us that that aid policy is being changed pari passu with limitations on the size of aid funds.
I commend the book to my hon. Friend the Member for Southport (Mr. Banks). It shows that the new engines of development are not primarily overseas aid but private investment. Even some of the more enlightened African leaders, who may understand free market economics better than Labour Members, are beginning to ask for capital, not aid. They want capitalist enterprise and entrepreneurs to get their economies—even in central Africa, let alone the booming countries of Asia—going.
I have declared an interest in the private finance initiative because I advise people on such matters. It is a superb initiative. I am glad that the Labour party supports


it; it has even claimed some parentage of it. I am not sure that I would accept that, but I shall let it go for a moment. What is being done is immensely valuable. There are some points on which I hope that my right hon. and learned Friend the Chancellor can go even further and give the PFI a stronger push.
I reject the argument that the PFI simply shifts funds off-Budget. It creates the opportunity for projects to be fulfilled, even if it is only a case of sale and leaseback, with far greater efficiency. The Northern line and the national insurance over-the-counter payments system are two examples of ways in which the PFI can produce£for the same amount of money as or perhaps a little more than can public finance£vast savings, much greater efficiency and a better product.
I hope that those responsible for the PFI in Departments will be organised even more effectively than they are. My impression is that the PFI has got going in the Health and Defence Departments. They are thinking about ways in which private finance could deliver more efficiently all sorts of services hitherto financed in the public sector. However, the other Departments need to get their acts together. The Health and Defence Departments seem to be ahead of the others, which need to move more vigorously. I hope that they will be encouraged to do so by my right hon. and learned Friend the Chancellor and his officials and colleagues in the Treasury.
In the private sector, the construction consortiums should stop grumbling and realise that they have to get organised. They must win the support of, although they need not become directly mixed up with, organisations that can raise the capital and handle the financial side of the huge new operations that they are going to build, own, operate and perhaps transfer. That will require capital support. The building industry and construction firms do not have the capital—and never have had it—for that sort of operation. They must work out relationships with the operating companies that can produce the capital.
I would like a little more attention to be paid inside the Treasury to working out the implications in years ahead of such deals. Some people argue that the PFI merely postpones until tomorrow the payments that we should be making today for infrastructure. That is partly true. It is a good thing if it produces greater flexibility, but we need to monitor it carefully and count up what the future payments will be—how they will operate and how they will impact on the Budgets of five, 10 and 15 years ahead; otherwise we will be back to year-by-year, seat-of-the-pants finance that opens us to the accusation that the PFI only postpones the evil day. I am not against flexibility, but the matter needs to be handled using a more modern accounting method than appears to be used at present.
The PFI opens up enormous opportunities. What is more—again, I declare my interest—just as we exported the skill of privatisation, along with many other skills that are needed all over the world, so also, if we develop the techniques for the PFI, we shall find every country in the world, from Malaysia to China, Taiwan, India, the Americas and Africa, seeking to learn the techniques from us. We have colossal opportunities and leverage in respect of that. I hope that it happens.
My last remarks involve another set of initials which concern a bird which, in my view, will never fly: EMU—economic and monetary union and its convergence

criteria. My right hon. Friend the Prime Minister asked some extremely pertinent questions, which I was glad to hear, when he made a speech the other day at the Guildhall about EMU. His questions have not received any answers because they are devastatingly accurate. Labour Members ought to feel that they should be trying to answer them because they are supposed to be broadly in favour of the single currency, the Maastricht criteria, the timetable and all that.
My right hon. Friend the Prime Minister asked how the relationship between the countries in the single currency and those outside it would work. How will those inside it feel about exports that will affect their textile and motor industries sweeping in from countries that cannot—or do not want to—join the single currency and have more competitive currencies?
What will the single currency do to the Euro-budget if there have to be huge compensatory mechanisms and a vastly swollen Brussels bureaucracy to increase redistribution to compensate the countries that cannot escape through a more flexible exchange rate? What will it do to the whole single market, which some of us have spent a quarter of a century encouraging and trying to build up? We are told that new barriers and divisions may have to be introduced between countries in the inner core and those outside it.
I never thought that I would make a speech in defence of the former leader of the Labour party, Commissioner Neil Kinnock, but I understand what he was thinking about when he began to say, as I believe he did, that the whole attempt to put the single currency into a political timetable over the next three and a half years or whatever was dangerous. If there is ever to be a single currency, it must come as a result of market forces and demand. It cannot be imposed by politics.
As my right hon. and learned Friend the Chancellor keeps reminding us, the Maastricht criteria—there are several others that one could add—are the normal indicators of good behaviour to which any sensibly run economy needs to adhere anyway. What discipline forces us to comply with them? It is not a lot of treaty declarations in Brussels but the dictates of the global financial system. That is the new gold standard.
People say that we should have a gold standard and that the single currency, instead, is not so bad. In fact, we have a gold standard: global financial disciplines that are so strong and which involve such a rapid withdrawal of capital in seconds—or nanoseconds—that, if things go wrong, they impose a deadly discipline on any country that seeks to move too far away from the sensible indicators of a low inflation rate, low interest rates, sensible borrowing, a sensible fiscal system and sensible rather than penal taxation on work and enterprise.
There is no need for us to submit ourselves to the so-called discipline of the single currency, even we wanted to do so. We have plenty of disciplines and they are the ones that we must obey. If we do not, the global financial system will come down hard on us.

Mr. Jenkin: Could it be that the Labour party is lunging at the single European currency because it imagines that it can escape from those international disciplines and believes that a single currency would somehow be a refuge from the real world?

Mr. Howell: There could be something in that. EMU may begin—although I do not think that it will fly—and


do great damage to Europe. If it goes at all, it will be full of curious arrangements such as stability pacts and compensatory arrangements, about which the French are talking, and could provide an opportunity for an irresponsible Government to start doing irresponsible things and somehow take cover behind the European system. I had not thought of that. It may be a way out. It explains why the Opposition do not talk much about global financial disciplines but hang on to the idea of a single currency.
Economic and monetary union and the single currency mean bigger government. Perhaps that really explains the enthusiasm of the Labour party. It means a lot more central Government, higher taxation by Europe and higher redistribution. Even if it came together—and, heaven knows, events in France make that less likely every day—I think that it would explode.
I realise that, in asserting that view, one is saying something rather challenging. One is saying that the whole French political establishment, which has been wedded to the idea of recapturing its monetary destiny, as it calls it, is wrong. One is saying that Chancellor Kohl, who is a great man, the small entourage around him and many other learned Europeans, great bankers and officials are all wrong. They are the ones who said that one cannot have a single market without a single currency. They said that that was essential for the future of Europe, and that, if we did not achieve that, it would be the end of civilisation.
If I am wrong, and we go ahead with EMU, we will have division in Europe on a most miserable scale. It is a prospect from which I want to rescue Europe. If all those people are wrong, we will witness the discrediting of the entire European establishment. That is an awesome and dangerous thing as well. I do not think that we should cheer should that occur, particularly as the European establishment has linked the future of European integration, which I favour, to the ludicrous project of the single currency.
We have an agonising choice with which we should never have been faced. It was not necessary. There is no solid economic argument for a single market having to have a single currency. With tomorrow's technology, one could probably have many more diversified currency relationships than one can have today. There never was any need to face Europe with that choice. There never was any need to put the European story and the enlarged Europe which we want at risk with the single currency. I believe that those who try to pose that choice to us will greatly regret their action in due course.

Mr. Robert Sheldon: I listened with great interest, as always, to the right hon. Member for Guildford (Mr. Howell). I could not have agreed with him more when he said that Britain is an attractive country. Of course we are, but that does not mean that we are economically successful. There are plenty of attractive countries.
As for the proof of our economic success, look at the Red Book and our balance of payments deficit. That is the best test of all. Last year, the balance of payments deficit for this year was forecast to be £3.5 billion; it was increased in the Red Book to £6.5 billion. Is that a sign

of success? Next year the balance of payments deficit will be £5 billion. Is that a sign of more success? Given the low level of activity in the economy in the past four years, we must ask ourselves why we have not been in balance at all. A period of low economic activity puts the brakes on; it is a version of stop-go. It is a recipe for getting an economy round and into balance. I have argued against stop-go many times, but one of its advantages is that it brings about a balance of payments surplus, or at least it removes the deficit. That has not happened during the past four years, and it is clear that there is something seriously wrong with our economy. Although we have carried on in the standard stop-go manner, we have not produced the results that one would normally always expect to find.
In a recession, imports and consumption decline, and that effect is the standard means of bringing an economy round. Not only have we suffered from a recession, but the value of the pound has reduced from DM2.95 to DM2.20. We all know about the J-curve effect, but that happened long ago. We should have been reaping the benefits now, but we are not.
I have always argued for a much lower exchange rate than we have had in the past, but I never expected to see it go down to DM2.20. When the exchange rate was DM2.95, I argued that it should drop to somewhere between DM2.30 and DM2.35. I did not like to voice that opinion because everyone would say that it was ridiculous. Now that we have an exchange rate of DM2.20, however, I am in the unique position of not wanting a lower exchange rate. If anything, I want it to be little higher.
We have had the recession and witnessed the pound going down against the deutschmark to DM2.20. We have seen cuts in public expenditure. We have seen a 7p increase in taxation followed by a reduction of 1p this year. The public sector borrowing requirement has gone up from £21.5 billion last year to £29 billion this year. All that has happened, and the balance of payments deficit is getting worse. One can draw just one conclusion from that—something has gone seriously wrong and our economy has not operated as it should have done.
I do not blame the Chancellor of the Exchequer. His predecessors thought that they were undertaking an economic miracle; in fact, they were preparing the foundations for a disaster. They ignored manufacturing industry and abandoned the skills and investment that used to be the cause of our prosperity. The basis of our prosperity was demolished in the early 1980s and those Ministers, in their arrogance, thought that they were doing something wonderful.
The question for the Chancellor and the House is, "What are we to do about the economy now?" We cannot allow the current tinkering with it to be the solution. A range of measures should now be employed. The one golf club approach, put so graphically by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), seems to be the standard feature of British economic policy, whichever Government are in power. In the 1960s, we had the one club of the exchange rate; in the 1970s, we had the one club of sterling M3; in the 1980s, we moved to a position between MO and M6; and now we have the one club of inflation. Despite the intellectual power that is supposed to lie behind Government decision making, Ministers are unable to concentrate on more than one variable at a time.


In practice, the Chancellor is well aware that he must balance several claims—growth, unemployment, the balance of payments, investment and inflation. They are all factors. The Bank of England can, of course, afford the simplicity of concentrating on one claim, the Chancellor cannot. His skill is to provide the mix of policies that balance all the competing claims. He is in a worse position than Harold Macmillan who complained that he had only last year's "Bradshaw". The Chancellor does not even have that; he has something much more out of date.
Doctrine is not required now. The Chancellor of the Exchequer cannot exist on a doctrine—we cannot exist on a doctrine. We require judgment—the ability to make decisions based always on inadequate evidence. We are always confronted with inadequate evidence, which is why we need judgment. If we had all the solutions we would not need high-powered people to make important decisions. Most Chancellors try to produce a theme for their Budgets around those important decisions.
No theme was attempted for this year's Budget—they are frequently rather contrived—but there is one ready to hand. My hon. Friends will not be surprised when I say that it has to do with investment. We must take that issue much more seriously than we have ever done before. We must invest in people and in capital equipment. We must invest to reduce unemployment and to encourage modernisation. It is through such investment that a Chancellor can lay the foundation for our future growth and our future as an economically successful country.
The problem for the Chancellor is that investment in people through education and training is mostly for the longer term. We know that. We know that results are not obtained quickly. With the approach to a general election, I would expect to see some deference to such investment. It is likely, however, to fall well short of what we really need. If there is to be more than a superficial response from the new Department for Education and Employment, it must engage in some long-term planning.
Although we hear many protestations about the need for training and vocational education, little has been done. We have been down that road many times. We have had more than 100 years of lamentations about the skills gap. Time and again in that period, half-hearted measures have been introduced. With the current level of unemployment, the need now for action is even more urgent. Our weakness in this respect is well documented.
One of the more ambitious measures of the past was "Rab" Butler's plan for technical schools, as envisaged in the Education Act 1944. It was a brilliant idea, but it withered—like so many schemes that have been played out before and since. In order to improve our skills we must come to terms with the fact that the education establishment does not like the idea of technical training. By a long process of inactivity it has thwarted, again and again, proposals to produce technical and engineering skills which other countries have always regarded as normal. As long as we used to be wealthy, we could afford to tolerate that bias against industry, but we should not underestimate it now.
Capital allowances must be brought up to date. I know that this is my old theme, but I have to mention it again. I have long been a supporter of the old investment grants for plant and machinery and there was a big surge in investment following their introduction in 1967. Of course, those investments were not always good—that is

the nature of such assistance—but there was a big improvement and the grants were a major encouragement for investment. However, the time has passed when such measures could be reintroduced.
We now need higher investment allowances. Once again, I must point out that the 25 per cent. allowance is damaging industry. Hardly any investment does not decline by 25 per cent. in value in the first year. We now have a massive disincentive to investment that is quite shameful. One would expect investment allowances to be pari passu with the decline in value of an investment. That would be ideal. Although it would not provide an incentive, at least it would recognise the reality. The current allowance does not even recognise the reality, let alone provide an incentive.
The loss of revenue is only a question of delayed payment of corporation tax, as the Chancellor will get the money in the end. I do not belittle the delay and I understand its implications, but it is not as serious as forgoing it altogether.
I should like the development agencies to expand to other parts of the country. They can be a useful way to channel investment. They have been successful in Scotland and even in Wales, although the Public Accounts Committee has had a few nasty things to say about what happened in Wales. The advantage of regional development contracts is that decisions can be made on the basis of involvement with those directly concerned. That gives people a stake in their own area and can promote greater responsibility in taking industrial decisions. It is an excellent idea and I should like it to expand.
All industrial decisions require management ability. Regular calls are made for the institutional investors to play a prominent part in improving management. Although they might not be good guides for making industrial decisions—I would not trust them with those—they can make excellent decisions about when to buy and sell shares and they should be able to use their weight in getting independent, non-executive members on to boards. Despite Cadbury, non-executive directors are too often chosen by the chairman, who wants friends to support him, not people who ask awkward questions. We must understand the nature of the relationship. Although the responsibility of non-executive directors might be more limited—one cannot expect too much from them or overload them as they work for only a few days a month at most—their presence can be a useful promoter of good practice.
One important area of economic policy where consensus between the parties would be most desirable is capital taxation. It is necessary because of the opportunities for postponing the realisation of capital gains and making transfers to avoid inheritance taxes.
In the post-war years, it has been possible to take advantage of the division between the parties and to wait for a different Government which might bring about changes. People can postpone the transfer of moneys until a change of Government and that can be destabilising, but capital taxes are an essential part of fair and sensible taxation. They are also valuable, even to those on the far right of the Conservative party, if only as a means of combating tax avoidance between income and capital. There have been many cases in the past of incomes being moved into capital for spurious reasons. We should seek to establish some common ground. We shall have to await


the new thinking that will surely come when the Conservative party seeks to come to terms with its period in the wilderness following the next general election.
I do not understand how the Government can reject capital taxes, which have existed for the entire century and are an essential part of taxation. We require the creation of a consensus on the treatment of those taxes. The level of such taxation will always be a matter for disagreement, but there should be some agreement on its structure. It is obvious that that is impossible now, but I expect some new thinking from the Conservative party after the next election.
Some people see the solution as looking to other countries and copying their activities. I was surprised that the Governor of Hong Kong fell into that category. Others have pointed to the tiger economies as though we have only to copy them. It is all becoming too fashionable. A flow of ideas is always useful, but we cannot consider emulation.
There are real dangers in importing economic models from other countries. Comparisons with eastern countries can be rather less useful than one might have thought. There are certain lessons to be learnt, but comparisons based on a failure to understand their social and historical backgrounds cannot be justified. So much of what we do develops from our historical and social backgrounds, and if we make use of them we can achieve results that are far better than those that result from copying alien Administrations.
All that may come about in the next year or so, after the election of the next Labour Government. The Budget was an opportunity to show how the decline of our country could be brought to an end, and it is a thousand pities that it was not taken.

Sir Peter Lloyd: The House is none the wiser about what the official Opposition would have liked in the Budget than it was before the debates began. I understand the concerns expressed by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) about the size of the PSBR, and the comments early in his speech about how some public expenditure decisions are made, and I shall return briefly to both those topics.
First, I congratulate my right hon. and learned Friend the Chancellor. He was hemmed in by unwelcome economic and political reality, and, with his Budget, he has extricated himself with considerable skill. He has put no new impediments in the way of continued economic growth, and he has given it some fresh impetus. I regard that as a success. He could so easily have done neither.
My right hon. and learned Friend's great achievement was to contrive to get his Budget dismissed by the Opposition and much of the press—not to speak of quite a number of my hon. Friends—as dull and unimaginative. By that means, he avoided most of the cynicism with which electors would view highly promoted tax cuts at present, while making sure that they appear in next April's pay packets, when they will be noticed rather less dismissively.
The announcement of tax cuts does not cut nearly as much political ice as some people believe, but reductions in stoppages on pay slips, whether as a result of thresholds going up or rates coming down, make a much deeper impression when they actually happen.
In the summer economic debate, I urged my right hon. and learned Friend the Chancellor to have the courage to be boring. However, I am afraid that he has been a little too exciting in one respect. I am sorry that, in addition to his well-judged raising of thresholds, he felt obliged to cut the standard rate of income tax by 1p. I would have preferred him to use the money to cut the PSBR. It would have been better to show those who are worried about its size and persistence that he gave a higher priority to reducing it. It would have been much easier then to make a substantial cut in interest rates.
The proof of the Budget's long-term success will be the way that those rates come down—and come down they must, and stay down, if we are to achieve the Chancellor's ambitious growth target of 3 per cent. next year, on which I take it that his public sector borrowing requirement projections are based. That is the only way of helping to restore confidence and activity in the housing market, and to assist property owners caught in the equity trap. No tax reductions or clever devices could conceivably do that, or have such a stimulating effect on the economy generally.
If there had been larger reductions in public spending, taxes could have gone down further, too, but there never was a realistic chance of that in this Budget. Spending programmes cannot be turned on and off like a tap without creating as many political problems as are solved, and just as many spending and administrative inefficiencies as are cured.
It is imperative that the inexorable growth in spending is checked and steadily reduced as a percentage of gross domestic product. One does not have to accept all the tiger economy argument to know that the United Kingdom would be better off if public spending were well below 40 per cent. rather than well above 40 per cent.
It is no criticism of the Budget to say that we do not have a sufficiently good mechanism to control public spending over more than one year, enabling Departments to plan properly for the medium term and to provide incentives to re-examine what Departments do and how they do it, in a way that produces proper priorities and genuine efficiency gains.
The way in which public expenditure survey reductions work is frequently wasteful of resources, and often compounds rather than cures inefficiency. My right hon. Friend the Member for Guildford (Mr. Howell) offered a good example. I do not understand the Government's justification for the cuts affecting the British Council and the BBC Overseas Service, and I cannot believe that they were thought through in terms of their impact on those organisations.
I do not have the finished solution to the overall problem—at least, not for this speech. I do not underestimate its complexity, which remains simply because it is so difficult to solve, even though real improvements have been made over the past few years in controlling spending sensibly over time.
If there is to be vigorous, unimpeded, long-term economic growth, that problem is one with which this Government or any other will have to deal much better in future than in the past. The Government cannot go on straining at the seams—in the way that the Chancellor has had to do, in trying to contain spending, in this Budget.

Mr. A. J. Beith: I am happy to extend to the right hon. Member for Fareham (Sir P. Lloyd) an invitation to join us in the Lobby to vote against a 1p reduction in the standard rate of income tax—and I shall shortly extend that invitation to Labour Members. I apologise if the right hon. Gentleman finds himself in bad company for that reason, but there will not be much of it, because it appears that most Labour Members do not want to vote on an issue central to the Budget's strategy.
The Deputy Prime Minister gave a glowing account of the state of the economy, in an optimistic, cheerleading manner that, such is his skill, would have enlivened the spirits of passengers who were going down on the Titanic. If the economy was as healthy as the Deputy Prime Minister said, we would be considering a different Budget from the one before us. If the economy was uproariously healthy, the Chancellor would be making the tax reductions for which so many members of his party and of the press called. The fact that those cuts were not made illustrates the problems that still beset the economy.
This year's growth forecasts were cut from 3.5 per cent. to 2.75 per cent. Next year's growth forecast looks distinctly artificial, being raised from 2.75 per cent. to 3 per cent. It may turn out to be a lot less—perhaps not much more than 2 per cent. Some commentators have even suggested that a mini-recession will occur. The borrowing forecast is up from £21.5 billion to £29 billion, and next year's figure of £22.5 billion is actually above the figure supposed for this year.
Again, that is a sign of an economy not in a state to deliver the tax cuts that the Conservative party wanted. There is to be a rise of only 1 per cent. in the whole economy investment forecast, and the 11 per cent. cut in Government investment will not help. That is not a healthy picture.
The Deputy Prime Minister, in dwelling on the significant, in some cases, structural changes that occurred some years ago, is in danger of looking as geriatric as he accuses the Labour party of looking. The right hon. Gentleman also is speaking from the past. Certain things were achieved, but they are not bankers and do not provide for the kind of improvement that the Chancellor wanted.
What a price we now pay for the failings that I identified. There is to be no additional investment in housing. The construction industry is profoundly worried, because it expected the cut in the roads programme, for which we argued, but there is no investment in the housing programme, which could have taken up some of the industry's slack. The private finance initiative is looking like a rescue operation rather than a means of adding to the stock of valuable public resources by allowing investment that would not have occurred otherwise—which was the basis on which the PFI was devised.
Year after year, I have sat on the Treasury Select Committee and been told, "This year, the PFI will really work. The rules have been successfully relaxed." Every year, false expectations have been entertained. This year, the PFI is expected to rescue a substantial part of that which everybody expected to be the normal public sector investment programme. The PFI is transferring a great deal of the current account to future years, because all that investment will have to be paid for—normally on current

expenditure, in the price that will be paid for hospital services, or prisons. As was pointed out earlier, that aspect ought to be taken more clearly into account.
The real-terms cut in overseas aid abandons the Conservative's manifesto claim that they would move towards the United Nations target. The substantial cut in the British Council budget has upset right hon. and hon. Members in all parts of the House, who recognise the council's important function, which it undertakes at low cost in terms of the good will that it earns for Britain abroad.
Something mysterious is happening with the Post Office, and I would like a specific response when the Chancellor winds up. In May, the Deputy Prime Minister, in setting out future plans for the Post Office, pledged not to take more than about half its forecast profits through the external finance limit. That pledge has apparently been abandoned in the forecasts before us.
The external financing limit will be £210 million next year and £300 million in the two succeeding years, which appears to be raiding the Post Office's profits. The result will be an inferior postal service, because the Post Office will not be able to reinvest those profits in the way that it ought to keep postal services ahead. The public will pay in postal charges.
The Government still do not have the energy package right, and tonight will face opposition to a number of their proposals for that reason. The Government attacked us bitterly when we talked about raising petrol duty by 5p a gallon. We were castigated by Conservative central office for making such an outrageous proposal. The Government are increasing the price of petrol by 16p a gallon, with no compensatory element for people who are wholly dependent on a car to get to work£which is particularly the case in rural areas.
One obvious way to compensate such car users is to reduce their fixed costs by cutting vehicle excise duty. There would still be a penalty on large users of fuel. The Government are increasing vehicle excise duty, albeit by only a small amount, when they should be cutting it as a compensatory mechanism for increased petrol duty. We will vote against the increase in vehicle excise duty.
It would be right for the House to revisit the issue of value added tax on domestic fuel, as one amendment would permit, because the Government are taking away a key compensation element for VAT. They are taking so much from the energy efficiency budget that 200,000 fewer pensioners' homes will have their lofts insulated, and 1,000 fewer people will be employed by the small businesses that provide insulation work. The Government are pulling the rug from around the knees of the elderly by taking away the compensation that they need to cope with even 8 per cent. VAT on fuel.
The Government were right to identify education, crime and health as priorities in the Budget. But close examination reveals that the Budget does not—as the Chancellor said it would—shift more spending to schools, hospitals and the police. The Secretary of State for Education and Employment claims that she has won £878 million extra for schools, but in fact that money is not there. Merely to stand still, local authorities would need £443 million for rising pupil numbers, new EC regulations affecting school transport and local government pensions. All those elements will build up to a total of £443 million.


Local authorities also have to pay for nursery provision and the expansion of the assisted places scheme. Local government will get £774 million, but £516 million will be taken up by inflation. That leaves only £258 million, which is nowhere near enough even for a standstill budget. When inflation is taken into account, the budget does not increase and there will be a cut in services to schools. Central Government spending on local government, including education spending, has merely kept pace with inflation. The only way schools will get extra money is by local authorities robbing other services or putting up council tax.
The Secretary of State for Education and Employment has put parents on duty as monitors of what local authorities do. She says—in the Department's press release—that parents must ensure that local authorities spend the money in the schools. That means that local authorities will have to abandon all discretionary, non-statutory spending: grants to students in further education; the youth service, which is very important in fighting crime; teacher training; and even nursery education. Local authorities will not be able to do that, because they have already been cutting those services for the past two years. My local authority in Northumberland has had to cut those services to stand still because of the cuts it has faced.
The extra money will have to come from the council tax. We know that, the Government know that, and they have included that in the figures in the Red Book, which allow for an 11 per cent. increase in council tax. The Government are simply passing the buck to local authorities by allowing them to increase the council tax by three times the rate of inflation.
Of course, when local authorities raise the council tax, the Government will attack them, but raising the council tax is the only way of achieving the object. The problem was brought into sharp relief by the exchange I had with the Deputy Prime Minister earlier. I asked the right hon. Gentleman what teachers should do. If they were to feel the benefit of the £9 a week promised by the overall improvements of the Budget and the economy, they would have to have a 4 per cent. pay increase. If teachers have a 4 per cent. pay increase, local authorities will have even less money to fund some of the services to which I have referred. Teachers cannot have it both ways, because they will not be better off if schools get their money. The schools will not get anything like the amount of money that the Secretary of State described.
A similar deception exists over NHS spending, which my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) described yesterday. The much trumpeted rise in current NHS spending will be offset by inflation and cuts in NHS capital spending. Overall health spending between 1995–96 and 1996–97 will not rise in real terms, and it will decline slightly in future years.
There is a separate line now in the Red Book for NHS spending, to cover the Government's pledge to increase NHS spending. It will increase by £200 million in the coming year and by £100 million in subsequent years. However, when one takes account of the higher level of NHS inflation, and the aging population, one sees that the NHS will be seriously squeezed.
I said that the Government were right to identify crime and policing as a priority. In other ways, the Government are taking money from fighting crime by cutting the youth and probation services—crucial areas of crime fighting. The 5,000 extra police officers on the beat that the Government talk about will not be provided by the Budget. At best, the decisions in the Budget might allow 1,000 additional police officers to be appointed. That is one third the number that the chief constables requested two years ago. I welcome those additional officers, but there will be cuts in every other aspect of the Home Office budget—except, of course, prisons.
I warn the Chancellor that he has not seen anything yet. The Home Secretary has plans to increase the prison population by 20,000. There is no provision for that in the Budget, and there is no provision for the changes that the Home Secretary intends to make in remission for prisoners. That will be a serious problem for the Chancellor in future, unless he can sit on the Home Secretary soon.
On taxes, the rhetoric and the reality are worlds apart. The Chancellor said:
My Budgets of the past two years have kept us on the course that we said we would follow. We have cut taxes, we are cutting taxes".—[Official Report, 28 November 1995; Vol. 267, c. 1072.]
That was just a week ago.
Where are the two years of tax cuts? Last year, the Budget contained £1.3 billion of tax cuts after indexation, but that was offset by £2.9 billion of extra taxes conveniently left over from previous Budgets, including MIRAS changes and fuel and tobacco duties. Taxes actually rose by £1.6 billion. This year's Budget appears to contain some £3.1 billion of tax cuts after indexation. However, that is offset by a £1 billion rise in fuel and tobacco taxes from previous Budgets, and a £900 million rise in council tax to pay for education spending. Stamp prices will rise by £120 million because of the Post Office changes..
The assumed contribution from business rates to local authority finance has shot up by 12.2 per cent. That sounds like marvellous news, but it is due to a more optimistic view by the Treasury of the proportion of money that will be collected and distributed. I will he delighted if that happens, but I am not convinced by the precedent set in previous years.
At best, the tax cut of £3.1 billion for 1996–97 declines to £l.1 billion after the inclusion of back-door tax rises. For 1995–96 compared with 1996–97, there is a total tax rise of £500 million, not the fall to which the Chancellor referred. Perhaps that is why we have not had the political Budget that this Budget was supposed to be.
I have some sympathy with the Chancellor. He was expected to work a miracle and to produce a Budget that solved everything that the Government have done wrong. Everything that has made people angry was supposed to be cured by tax cuts: the depth of the recession; negative equity; VAT; rail privatisation; fat salaries in privatised industries; ministerial resignations; the sleaze factor; divisions within the Conservative party on Europe; and the Scott inquiry. Tax cuts were supposed to make the people forget all those problems.
That was the theory, but it was never a good one. The Chancellor was in no position even to attempt to put that theory into practice in the Budget. The Daily Telegraph—a stalwart of Tory support—called it "A penny for your votes".


The theory is not going to work, and the Budget will not undo the damage done by the Government's other policies. The Daily Telegraph's verdict is a deeply sarcastic and rather accurate judgment. The Tory party cannot be saved by a concession to vintage car owners. I admit that I wrote to the Chancellor on this. I do not have a vintage car, but some of my constituents have. The measure is useful, and tidies up the position, but the Government cannot be saved by vintage cars.
The Budget cannot save the Government from their fate. It fails to meet the national need for investment in education. But where is Labour? The Opposition are trapped in the Tory tax-cutting agenda, like rabbits trapped in the headlights of a car. A rabbit can run this way a bit and it can run that way a bit, but it dare not get out of the headlight's beam. The Labour party is engaged in a tactical game, the rules of which are made by the Conservatives. If the Government say tax cuts, it says tax cuts. If the Government say standards in education, it says standards in education. Whatever the Government can deliver, Labour can deliver more of the same. That is not a realistic basis for Opposition policy.
I ask Labour Members of Parliament to tell us what Labour's priorities are. I ask them not to give the Leader of the Opposition a political blank cheque to put tax cuts before decent education by going into the wrong Lobby tonight. If the Labour party can abandon that much in opposition, how much could it abandon in government?
Tonight, we will vote against the 1p reduction in income tax, because we, like the public, want to see the money go at this juncture to decent schools, to guarantee the future of our country. It is no use going on about monitoring standards unless one talks about where the resources will come from to raise them, so we invite those who believe that, in this Budget, the priority should be to put education right to join us in the Lobby and vote against that tax cut.

Sir Thomas Arnold: It is a pleasure to follow the right hon. Member for Berwick-upon-Tweed (Mr. Beith). When he was a member of the Treasury Select Committee we had a very good understanding. I was amused, therefore, by what he had to say about the Liberal Democrats' policy on roads, saying that they welcomed the Government's decision to cut the roads programme. But that is not what the Liberal Democrats locally in Hazel Grove have been saying. They want a number of local roads. Indeed, they forecast locally that the roads programme would be cut. It was not and a number of programmes will go ahead. That episode underlines once again the wisdom of the American politician—I think that I am correct—who said that all politics is local.
I congratulate my right hon. and learned Friend the Chancellor on a very skilful Budget, and join the right hon. Members for Berwick-upon-Tweed and for Ashton-under-Lyne (Mr. Sheldon) in making one or two remarks about the private finance initiative. This morning, the Treasury Select Committee took evidence, yet again, on the PFI. We have been doing that now for several years and, I have to tell the House, we are none the wiser. There is too much that is opaque and couched in language that is simply incomprehensible. It is not a party issue. Indeed, judging from this morning's exchanges, there is a good

deal of cross-party agreement on the subject and a desire to go ahead and support the policy, but we need to know more about it in ordinary language that people can understand. Therefore, I think it likely that the Committee will want to hold an inquiry on the subject in the new year, and issue a short report, because we simply cannot go on like this. It really is incumbent upon the Treasury to find ways and means of making the policy more easily understood. Let us have some specific examples of the agreements that are being made. Let us see how they vary between one project and another, and then we can begin to understand how this wholly admirable policy in principle is being implemented in practice.
I shall concentrate my remarks on monetary policy and welcome the robust stand that my right hon. and learned Friend took during the summer months in agreeing not to put up interest rates. It has been only a few months since the Bank of England—we know what the advice was from the publication of the minutes of the monthly monetary meeting—was asking for an increase in rates at a time when it was already becoming apparent that the economy was slowing. My right hon. and learned Friend resisted that appeal and was absolutely right to do so. I say that because we have had a good deal of evidence during the autumn and as we go into the winter that growth has been moderating and slowing down. Even if there is not a deflationary bias in the economy, it is certainly now apparent that there is not an inflationary bias. Whatever increases may have taken place as a result of a surge in commodity prices, they appear to have worked their way through the system, and the immediate prospects for inflation are not at all bad.
I fully understand the difficulty that the Governor of the Bank of England faces, because he is enjoined by the Government, the Treasury and the Chancellor to give advice that is designed to help the Government to meet the very strict inflation target of 2.5 per cent. by the end of the Parliament. He can give that advice only on the basis of the evidence that is available to him when he is asked to give his opinion. He carries out what he calls a balancing act and then gives his opinion. Clearly, the Chancellor has to take account of a much wider range of factors, and I hope that my right hon. and learned Friend will listen to what I believe is a persuasive case for cutting interest rates.
The Budget forecasts that expansion—growth in the economy—over the next year will be some 3 per cent. One can say that that is trend or slightly above trend growth, but it appears to be a faster rate of activity than that which we are currently experiencing. If that is so, given the slowdown in activity elsewhere in the world, it is likely that we will not be able to rely on the expansion to be driven on net trade, as the recent expansion was. We must all look for more buoyancy from consumer spending, and we are unlikely to obtain that unless we can promote more activity in the economy. Indeed, a cut in interest rates would help that process considerably.
I understand the difficulty that the Chancellor faced in framing the Budget when his tax receipts were considerably less than that originally forecast—the public sector borrowing requirement came in very much higher than was forecast this time a year ago. He was short of some £8 billion or so of revenue. That has been a very difficult situation for him to deal with, but again that is a reason for relaxing monetary policy now to encourage more activity and in turn more buoyancy from the


revenue. There is plenty of evidence to suggest that a modest stimulus of the kind that we could expect to see from a gradual loosening of monetary policy at this stage would be effective for the rate of activity in the economy.
We now have a much better understanding of the way in which the Government take decisions on monetary policy, and the monetary framework is, in many respects, admirable. I have no wish to criticise it in any way. The framework shows that the evidence on which the Bank gives its advice is of a kind about which it is frequently difficult to be certain. Indeed, if one looks at the last Bank of England inflation report, one sees that, far from the Bank showing the certainty that the Governor showed in the late spring and summer, it says—at the beginning, in the middle and again at the end—that the situation is so full of uncertainties that it is difficult to know exactly what is taking place. That being the case, set alongside the evidence of a slowing economy, I think that the Chancellor would not be taking any great risks if he now moved towards a slow easing. I have no particular view about the number. I think that it can be done in quite modest steps, and we can see how the situation develops. I simply do not believe that he would be taking any great risks with inflation, for the reasons that I have given. Inflation is low and is likely to remain low for some time to come. His Budget arithmetic depends on a revival of confidence, and on a further expansion of output and of activity. I hope, therefore, for all the reasons that I have given, that he will now feel able to ease monetary policy.

Mr. John Hutton: I agree strongly with the comments of the right hon. Members for Guildford (Mr. Howell) and for Berwick-upon-Tweed (Mr. Beith) about the British Council and the BBC World Service. It would be a mistake to implement the cuts that the Chancellor proposes to make, and I hope that a way can be found to ensure that they do not happen.
I congratulate the hon. Member for Hazel Grove (Sir T. Arnold) on a polished and eloquent speech, made, of course, without reference to notes, which is something that I will not try to emulate. I agree with his remarks in relation to the PFI, and I shall say one or two words about that later.
Two things can be said about the Budget: first, that it has been grossly over-hyped by both the Tory tabloid press and by Tory Members of Parliament. It was supposed to be the Budget that would simultaneously restore Tory party fortunes and galvanise the country behind the idea of another term of Conservative Government. In fact, the Budget has completely failed to make any kind of impact or impression on public opinion.
The Budget arithmetic is already beginning to unravel. This is a Budget characterised by creative accountancy and false claims. People will not be £9 a week better off because of the Budget. The real figure for a typical family with two children, according to the House of Commons Library, is £2.03 a week. People will be left seriously out of pocket when the 21 Tory tax rises since 1992 are taken fully into account. They will be £670 a year, or £13 a week, worse off. That will be the true state of personal finances after the Budget.
Even the claims that the Government have made for the Budget rest on Treasury forecasts, and we know just how unreliable those forecasts have been in the past. We have had higher inflation than expected, borrowing has been much higher than predicted, investment forecasts have been hopelessly inaccurate and there has been slower growth and smaller manufacturing output.
The problems for the Government are more fully reflected in the Red Book. Last year, the Government thought that their receipts in this financial year would be £298 billion. Now they think that they will be £284.8 billion. That is a spectacular and unprecedented undershoot of more than £13 billion. We have seen an undershoot of £4.8 billion in income tax and £5.2 billion in lower and smaller VAT collections.
That serves to emphasise the second point that can be made about the Budget, which is that it has failed to address the fundamental weaknesses of the British economy. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) vividly revealed one of the central weaknesses of the British economy towards which the Budget will make no significant contribution—the serious balance of payments deficits that have been run up in recent years. Most importantly, the Budget will fail on the key question of investment. There is nothing in the Budget which will stimulate private investment while, at the same time, public investment, particularly in areas such as the NHS, has been hit hard.
There is an obvious but depressing short-termism about the Budget. Despite the Chancellor's claims to the contrary, investment in infrastructure is one of the few ways in which the Government can improve the conditions for economic growth. But even if we are to take the recycled claims about the private finance initiative at face value, the Chancellor is still planning to cut capital spending in education and health in favour of higher consumer spending. We all know that the Chancellor is ïn a political hole—he refers to it frequently—but it is a hole entirely of his own making.
However, this is a case of cutting off one's nose to spite one's face. In short, there is little in the Budget which will help investment or reduce the unacceptable levels of unemployment in our society and deal with the real problem of job insecurity, which is now a major drag on the British economy. The jobless will get little cheer from the Budget.
Training budgets have been cut by a further 4 per cent. on top of the substantial cuts in training and enterprise councils' budgets this financial year. My county of Cumbria suffers pockets of extremely high levels of unemployment, particularly in my constituency and along the west coast of Cumbria. But Cumbria training and enterprise council's budget has been cut by £1.25 million this year—nearly 7 per cent. Such cuts are completely unjustified against the background of the unemployment problems in Cumbria.
The balance of tax measures in the Budget will neither promote greater fairness, which should be a priority for Government, nor represent good value for money. I mention in particular the £250 million being spent on reducing inheritance tax liability. That money could have been better spent, and should have been spent, either by reducing income tax for the lowest wage earners or by lowering VAT on domestic fuel. Either of those measures would represent a much better spending priority.

Mr. Michael Stephen: Does the hon. Gentleman accept that inheritance tax is iniquitous because it is a tax on money which has already borne tax throughout the lifetime of the deceased person?

Mr. Hutton: No, I do not accept that. Inheritance tax is a Conservative tax. If the hon. Gentleman has those strong feelings about inheritance tax, I am surprised that he has not been voting against previous Conservative Budgets.
I come now to the impact of the Budget on the housing market and the building industry and I want to say one or two further words about the private finance initiative. The Chancellor ruled out taking any special measures to boost the housing market or to promote growth in the construction industry. He may be right that there is no magic solution to the problems of the housing industry and the construction industry generally, but at the very least we should stop doing things that damage the confidence of home owners and prospective home buyers and which in turn have a damaging effect on the construction industry.
In my constituency, the construction industry and the housing market are seriously depressed. The Government could do two things in particular which would improve the general confidence of home owners and prospective home buyers. First, they should consider much more seriously the phased release of capital receipts from the sale of council house properties. If that was done in a sensible way, it could stimulate the construction industry. In particular, the Government should reconsider recent changes to income support and mortgage protection payments for those people who are out of work.
Clearly, the Government's intention is to switch the emphasis on to private insurance and away from support from the Department of Social Security. That will cause huge hardship. In particular, it is doubtful whether private provision will ever be able effectively to compensate for provision formerly provided by the DSS.
The Government should consider two problems in particular. First, there is a serious lack of awareness on the part of borrowers about the effect of the Government's income support changes. Recent surveys conducted by the building societies show that a third of existing borrowers still believe that in the event of unemployment the DSS will be there to provide them with a helping hand. That simply will not happen. Secondly, many of the mortgage protection insurance policies are so full of holes that they frequently fail to cover many of the redundancy situations that our constituents experience.
A particular problem in my constituency, which I know will be reflected elsewhere, concerns contractors and those who are self-employed. Many existing mortgage protection insurance policies fail to deal adequately or at all with those categories of workers. Policies such as those whose virtues the Prime Minister has trumpeted in the House and elsewhere—particularly those now adopted by the Skipton building society, to which the Prime Minister referred on 8 June at column 317—as representing the best practice of building societies, in fact turn out to be something substantially less than that.
The Skipton building society policy does not cover the first 56 days of redundancy and does not apply at all to absence from work caused by illness or accident. I am perfectly prepared to accept that the Skipton policy

probably represents the best policy that is available. But it does not deal with the real situation facing many of our constituents. In many cases, there will effectively be no mortgage protection payment in the first 56 days of redundancy, and that will stoke up serious arrears problems for many people.
Many lenders restrict the sale of insurance to new borrowers, because they are concerned, as the Woolwich and other building societies have made clear, that an existing borrower who wants mortgage protection insurance to cover redundancy could well be perceived as someone who is at risk of redundancy, which is one of the conditions that will frequently exclude a person from taking any benefits under such a policy.
The chief executive of the Cumberland building society wrote to me on 29 November to express his concerns about that Government policy. He said:
We strongly feel that the reduction in income support to owner occupiers is inequitable and can only have an adverse effect on the housing market.
I agree with the chief executive of the Cumberland building society, Mr. Ian Kitchen. It is a shame that the Government are not prepared to reconsider their proposed changes to the rules governing income support.
Many hon. Members have spoken of the private finance initiative. Along, I am sure, with every other hon. Member, I support the concept of genuine partnership between the private and public sectors: indeed, Opposition Members have long advocated that concept. The PFI involves problems, however—problems accurately identified by the hon. Member for Hazel Grove.
I have further anxieties. There is evidence that the PFI is becoming a vehicle not for genuine partnership between private and public sectors, but for a takeover of the public by the private sector, which would be a regrettable development. There is also clear evidence from the Budget that the PFI is a substitute for previously promised public sector capital spending, particularly spending in the national health service. The PFI does not, of course, provide cheaper sources of finance than those currently made available to the public sector by the national loans fund. Moreover, as the right hon. Member for Berwick-upon-Tweed has pointed out, in transferring capital spending to current expenditure streams we risk stoking up problems for many public sector organisations in the future.
I want a successful private finance initiative. I want sources of private finance to be released for use in the public sector. I do not, however, want the PFI to be substituted for public expenditure itself. For many years, a hospital in Ulverston, in my constituency, has provided excellent services for elderly people who need national health service beds; along with other services, it provides respite care. The building is now unsuitable, and no longer provides the standard of care that many people expect from the national health service. It needs to be replaced.
Morecambe Bay health authority is currently consulting organisations in my constituency and elsewhere, including the community health council, with a view to replacing the hospital with a new all-purpose residential facility and a new primary health care facility. I support that plan, and I support the concept of involving a private financial partner; but I have reservations about the application of the PFI to the renewal of the hospital. In particular, I want


the range of services provided in that hospital to stay in the national health service. I think it extremely important for such services to be provided by NHS trusts in particular. I do not want management services in the new hospital, when it is built—which I hope it will be soon—to be contracted out to people outside the NHS, and I do not believe that my constituents want that either.
Moreover, as the hon. Member for Hazel Grove pointed out, the PFI is so bureaucratic and the rules relating to approvals so cumbersome that the scheme could be seriously delayed. I do not want the PFI to operate in that way: I do not want it to delay schemes, and to ensure that they disappear. We need that new hospital in Ulverston, and I want to make certain that we get it. The PFI has become something of a smokescreen to hide cuts in public sector capital spending—and, I suspect, an example of the kind of dubious creative accountancy for which the Government have become notorious over many years.
I do not think that the further round of cuts in the Ministry of Defence budget has been mentioned, at least today. I am sure that everyone supports the case for increased efficiency in all Departments—there can be no argument against it—but it is now proposed that a further £500 million of cuts this year, a further £500 million next year and a further £400 million the year after that should be found in efficiency savings. Those savings were not identified in the "Front Line First" study this time last year; they are to be made on top of the savings identified then.
If those are genuine efficiency savings, there can be no argument. My only concern in that event would relate to why they were not identified earlier, as the failure to identify them clearly represents a substantial loss to the taxpayer. If, however, the £500 million this year and the total of £1.4 billion over the next three years is to be found from the MOD's procurement programmes, the cuts should be resisted. I see no justification for further large cuts of that kind, especially as they affect the Royal Navy—which, as many hon. Members know, has a substantial base in my constituency. Two big programmes are coming up, for the replacement of submarines that the Navy needs in the future and for new assault landing ships. I do not want either programme to be delayed. I do not believe that there is any military argument for delay, and I hope that whoever winds up the debate will be able to reassure me. [Interruption.] Does the Chancellor wish to intervene?

Mr. Kenneth Clarke: No. I was just sitting here sympathising with the hon. Gentleman, who represents a lone voice in the Labour party in expressing doubts about defence cuts. But he is, of course, the hon. Member for Barrow and Furness. His distinguished predecessor, Albert Booth, used to find himself rather alone on that subject.
Having listened to all his hon. Friends asking for more to be spent on everything else while asking for taxation to go down to lop in the pound, does the hon. Gentleman really believe that there is the slightest prospect of Labour's not trying to cut the defence budget to make room for some of that?

Mr. Hutton: I was simply saying that, if these are efficiency savings, I think that every hon. Member would agree that we need to continue to make efficiency gains.

Mr. Clarke: I am trying to help the hon. Gentleman. I did not intend to stand up and attack him. I can reassure him that these are efficiency savings, which are not based on any cuts in procurement. He was right to ask the question, which interests people in Barrow and Furness, but he will have to protect them from the rest of the Labour party if it is ever near to taking office.

Mr. Hutton: I do not want us to have an argument about the matter, although I suspect that we are about to have one.
None of my constituents will take lectures from Conservative Ministers, or other Conservative Members, about cuts in defence expenditure. Since 1991, billions of pounds worth of programmes have been cut from the expected work profile of Vickers Shipbuilders and Engineering—capital projects and procurement programmes. The result, in terms of job losses, must be clear even to the Chancellor of the Exchequer. Nearly 10,000 jobs have been lost from the VSEL shipyard in Barrow since 1991.
I am not arguing against efficiency savings; I support them. I do not want money to be wasted anywhere in the public sector. I do not, however, want substantial cuts to be made in front-line equipment that the armed forces need if they are to defend and protect the country's interests internationally and in NATO, and I do not believe that my hon. Friends want that either. There is no consensus in the House of Commons for such cuts.
I am glad that the Chancellor has confirmed that there will be no further procurement cuts in the MOD's budget; my constituents will welcome that news. It may surprise some of the Chancellor's Government colleagues, but I am grateful for the assurance.
This Budget will make no lasting impression. There is a growing gap between ministerial rhetoric about the state of the economy and the way in which our constituents experience the economy in their own lives. That growing gap between rhetoric and reality, which underscores everything that the Chancellor has said in the Budget debate, is one reason why I expect the Budget to be regarded with contempt as a pathetic attempt by the right hon. and learned Gentleman to regalvanise support for his dispirited and now degenerate Government. I do not believe that hon. Members—especially Conservative Members—will do themselves any favours by supporting this contemptible Budget.

Mr. David Martin: It seems that we are all agreed on at least one matter: this is unquestionably a Budget for another Budget rather than for a general election in 1996. It is none the worse for that; Budgets dubbed general election winners—or, indeed, general election losers—have an uncertain historical record. What matters is the proper management of the economy and the electorate's perception of it as it affects them, their families and even their neighbours. That failure was at the root of Labour's loss of office in 1979, and it has been at the root of the lack of electoral success in all the long years since which Labour has enjoyed—if that is the right word—in opposition.
We are experiencing an uncanny echo of those days, but this time it is in France where, instead of the International Monetary Fund, the German Bundesbank is


writing the script. I wonder how many business men in this country realise that what is happening in France has far more profound effects on our economic and political prospects than the Budget, with its fiscal adjustment of 1 per cent. of total expenditure and 0.5 per cent. of gross domestic product.
Market realities, monetary policy and exchange and interest rate movements are far more serious determinants of the future economic prosperity and well-being of those whom we represent, whether rich or poor, young or old, employed or unemployed, and in those respects the Budget, although worth while in itself, is like holding a candle to the sun.
My right hon. Friend the Member for Guildford (Mr. Howell) mentioned the awful events in France. The recession, the unemployment and the resultant out-of-control public finances and public sector anarchy result from applying, come what may, the straitjacket of an overvalued currency in a single-minded obsession with monetary union, with reaching the Maastricht criteria and with eventual abolition of the franc and adoption of the Euro-mark by the turn of the century. How right my right hon. Friend the Prime Minister was to negotiate that single currency opt-out for us.
I know that the Cabinet is uneasy about policy on monetary union and the abolition of the pound, but as I am on the Back Benches I am, thankfully, not bound by such collective responsibility. I am also flushed by the recent letter that I received from my right hon. Friend the Chief Whip telling me how much he appreciates my "unblemished voting record" in the last Session. Perhaps I can afford to spend a little of that credit in saying that if France is forced by the unions and by student-led turmoil—to which the French Government will probably soon capitulate, as they have so many times in the past—to release the franc from its straitjacket and let it float free, the cheers that should go up in the House, and from No. 10 Downing street no less, ought to be heard in Paris. The consequences of that in setting back the ridiculous timetable for monetary union and the single currency would lead to a greatly improved competitive age for us all. My right hon. and learned Friend the Chancellor would certainly recognise the benefits for his next Budget.

Mr. Salmond: Will the hon. Gentleman give way?

Mr. Martin: No.
Throughout Europe, interest rates would come down with greater confidence, which is precisely what is required here, and the Government might even be encouraged to rule out any question of abolishing the pound in the lifetime of the next Parliament. In saying so, our backs, unlike those of the French, will clearly be turned against further damaging European integration which neither people in this country nor the overwhelming number of businesses want. Nothing could be more drastic than the adoption of a single currency, which is the absolute essence, the heart and soul, of integration, which would bring with it not only impossible pressure to adopt the social chapter in due course but compliance with all the other anti-competitive Euro-nonsense measures that would undoubtedly be forced on us once the great currency plunge had been taken.
I shall now turn to matters that are specifically dealt with in the Budget. I say quite frankly that I would have welcomed bigger tax cuts, but taxes can come down only if the state takes less. In that context, I welcome the

Government's determination to reduce below 40p in every pound the amount of national earnings that are taken by public expenditure. If we can achieve that with further tax cuts, I have no doubt that we shall discover that the consequential growth that is generated will produce more pounds in taxation to pay for the teachers, the doctors, the nurses, the police officers, and so on, which we require and which the Budget has also produced. That is welcome.
That is the answer to the old socialist claim that one person's tax cut is another person's loss. Such a claim presumes that the national income remains the same, but what in fact happens is that more national wealth is created when enterprise is encouraged in a low-tax, high-incentive economy such as the type mentioned recently by no less a person than the Governor of Hong Kong. In my experience, he has not always been so closely associated with promoting such economic views.
On a related matter, may I say that those who rely on opinion poll evidence of voting intentions—that people would rather more was spent on education than on lower taxes—have been shown by the Budget that that is a facile approach and a false choice in a prudently managed economy. With such management, we can have both. That brings me to those who wish to see change and reform to improve the working of the welfare State rather than damage it, which change and reform are often misrepresented as seeking to do. I wholly agree with what the Chancellor said when he presented his Budget. He said:
the British people need to be prepared and equipped to embrace change in a flexible way. They will be more willing to do that if they know that high-quality schools, health care and a safety net for the unemployed, the disabled and the old are there if and when they need them."—[Official Report, 28 November 1995; Vol. 267, c. 1058.]
That is what I, too, entered politics to promote. Those objectives are often wrongly taken to be the exclusive preserve of so-called one-nation Toryism, and equally often mischievously contrasted with the aims of those who press for change in the means of achieving them.
Of course the welfare state can and does help to deliver all these good objectives with which no one can argue, but they are not achieved wholly through reliance on the way in which our welfare state and economy operate today compared with what seemed sufficient yesterday or in 1945 or at any time since. If the welfare state as it has been operated has indeed created one nation, it is difficult to explain how, despite more and more money being poured into it year after year, it cannot under any Government sustain full employment or comprehensively tackle serious worries about violent crime, vandalism, drug abuse or family breakdown, to mention just some of the issues that are on the minds of my constituents.
Many people believe not only that too easy access to the benefits of our welfare state contribute to all those problems but that the burdens of taxation, particularly on the working poor to pay for them, fuel the disincentive to wòrk for a living and drive a wedge between those in receipt of benefit and those who do not qualify for it. My definition of one-nation Toryism embraces not only the Chancellor's objectives but the means to bring them about. Public expenditure is required, of course—less of it, but certainly a great deal of it—with private sector methods to make the best use of it in serving the public, more encouragement of self-help, of saving, of


independence rather than dependence, and more action to encourage social responsibility through individual rather than collective state-run action. We need more trust in terms of people keeping their own money, and more belief in the benefits of doing that, and we need more recognition that the pursuit of profitable enterprise serves the public and that it could not succeed if it did not. Those who want reform to bring about such changes are not living in cloud cuckoo land. They are inhabiting this land and they are mindful of votes.
Some people's votes for parties or Governments may depend on a crude assessment of how much taxpayers' money—miscalled public money or, even worse, disguised in jargon as resources—is spent to buy them. The Labour and Liberal Democrat parties exist on that belief. But I represent a substantial number of people who are not motivated solely by such considerations and who do not have such trust in the all-powerful state. Whether they sometimes forget it between general elections, they are Tories and they are one-nation Tories too.

Mr. Alex Salmond: I am sorry that the hon. Member for Portsmouth, South (Mr. Martin) did not give way to me. I was going to put the far from facetious point to him that, if he believes, as I am sure he does, that in the past three years one of the few successful bright spots in the United Kingdom economy has been the pound's accidental devaluation and depreciation after the exit from the exchange rate mechanism, the last thing that he would want is to see France, one of our major competitors, go down the same route, particularly if it provoked a series of competitive devaluations across the rest of the European Union. All the gains that the UK has had from that have been dependent on other countries not depreciating as well. He might want to consider that thought before he suggests that the French economy should get itself into a more competitive position than the UK.

Several hon. Members: rose—

Mr. Salmond: I shall offer the Chancellor of the Exchequer the opportunity to defend the hon. Member for Portsmouth, South.

Mr. Kenneth Clarke: I give credit to the Scottish Nationalists for having an economic policy for Scotland, which is more than the Labour party has, but is the hon. Gentleman seriously suggesting that the best route for France is for the communist trade union and others to succeed, for the social security system to remain broke, for all the structural reforms in France that are needed to be defeated and for the country to seek resort to competitive devaluation? He makes it sound as though he thinks that the successful outcome of the strikes and the franc's devaluation is all that the French should aim for. That is what the Labour party used to do when it was in office.

Mr. Salmond: I am sure that the Chancellor has been listening to my remarks, but, clearly, he has not been listening to the remarks of his hon. Friend the Member for Portsmouth, South, who was predicting as welcome the exit of the franc and the departure of French policy from the exchange rate mechanism, following the same

path as the UK three years ago. I was merely pointing out that there is a competitive gain from that accidental policy three years ago. I know that the Chancellor does not like to acknowledge that—which is understandable as it removes any credit that he might want for his policies—but is it not true that, if other countries in the exchange rate mechanism follow a downward competitive devaluation, the competitive gain that the UK has experienced in the past three years will largely be written off? Whether it is a good or bad thing is neither here or there. The point is, that is a fact.

Mr. Clarke: rose—

Mr. Salmond: I shall allow the Chancellor one more attempt to explain his thinking on the matter.

Mr. Clarke: I know of no country that, since the war, has gained any economic advantage just by devaluing its currency. It is a mistake to start spreading the belief that devaluation is some sort of desirable activity.

Mr. Salmond: I was speaking about a belief that I know is widespread among Conservative Back Benchers. When the Chancellor deals with such points, he should turn around and address the atheists on the Conservative Back Benches who do not follow his position and who believe that any gain experienced in the, past three years has been the result of his predecessor being humiliated and chased out of the exchange rate mechanism.
Having stirred the Conservative party into total revolt against the Chancellor, I shall go on to make my speech. I note that Conservative Members have taken some consolation from the argument that, many times, Budgets that are poorly received develop like fine wines through the course of time. It is also true that some enthusiastically received Budgets have turned into vinegar later. I think in particular of the 1988 Budget, which was ecstatically received by Conservative Members at the time. By the end of that year, however, most of them were rueing the day.
I want to offér the House a third possibility: a Budget that is poorly received initially may remain poorly received over a period. I suspect that that is what will happen in relation to the fate of the Chancellor's present Budget. I noted that Bill Keegan, commenting on Sunday in what was a friendly column, given what he has written previously about the Chancellor and his predecessors, described the Budget as perhaps a "prisoner of failure". That is roughly right, because the Chancellor's room for manoeuvre was boxed in by a range of factors that are merely the result of this country's poor growth performance over the years. The Chancellor has therefore been reduced to manipulating his public sector borrowing requirement forecast and to giving an optimistic view of a surge in growth in a slowing economy.
In the past 16 years, the United Kingdom's growth performance has been poor by international comparisons. Those of us who were here for the economic debate that preceded the Budget will remember an exchange about whether it was appropriate or correct to make international comparisons with the UK from 1981 instead of 1979, when the Conservatives took office. The argument from the Government Benches was that it was unreasonable to count the first two years of their stewardship of the economy because, apparently, the problems of the period from 1979 to 1981 were not the fault of the then Chancellor of the Conservative party; they resulted from the winter of discontent whose effects were rolling through the UK economy.


Some of the disastrous things that happened to the UK in that two-year period might have had something to do with the deliberate policy options that were taken to transfer the taxation burden on to indirect taxation, thus increasing the inflation rate substantially. The exchange and interest rate policy set sterling at a rate that, in retrospect, I think everyone would regard as extremely uncompetitive. Certainly, the Tory Back Benchers who argue that devaluation has been the salvation of the UK economy in the past few years must surely accept that sterling's rate between 1979 and 1981 caused severe strains for the UK economy.
It is reasonable, therefore, for Opposition Members to say that, if the Government want to compare their record with other Organisation for Economic Co-operation and Development countries, they should compare the record over the full 16 years of their stewardship of the economy, not conveniently omitting the first two years, when the economy effectively fell off the cliff and it was hardly surprising that it managed to scramble its way partly back up the precipice.
By virtually any international comparison, those 16 years have not been a good experience for the UK. It was the one major western European economy that had the benefit of a huge windfall gain from the North sea—£100 billion, a huge boost to the GDP, to the balance of payments and to Government revenue—yet, with that windfall, over those 16 years, the UK's average annual growth performance since 1979 has been 2 per cent. The average for the rest of the European Union is 2.1 per cent. That is not a huge difference, but all those European Union countries did not have the benefit of that huge windfall gain.
What makes it even worse is that, in the previous 16 years—from 1963 to 1979, when the economy was run by unreconstructed socialists such as the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and the late Lord Wilson—the UK's average growth rate was 2.6 per cent., considerably better than the average rate over the past 16 years, so neither by the comparison with what previously happened in this country nor by any fair international comparison is it reasonable to describe performance in the past 16 years as anything but mediocre.
Especially in Scotland, we consider the experience of the other oil-rich country of Europe, the small nation of Norway, which has experienced a growth rate of 2.9 per cent. over the past 16 years and which, from a position in 1979 roughly equivalent in terms of GDP per capita with Scotland and the UK, is now roughly 25 per cent. more prosperous. That is the penalty that we have paid in the past 16 years for this country's mediocre economic performance and for the Chancellor being a "prisoner of failure", as Bill Keegan said about the Budget.
I am tempted to consider further the oil benefit that the Chancellor and his predecessors have had, which was followed by the privatisation benefit to the PSBR. In this Budget, we can detect what the third great trick with the PSBR figures will be: the private finance initiative. Just as oil and privatisation proceeds massaged the PSBR, the private finance initïative is set to take its place as the great camouflage to hide the underlying position in public finances, which is desperate.
My party and I and our allies in Plaid Cymru will vote against the 24p basic rate of income tax, although not, I suspect, for entirely the same reasons as the right hon.

Member for Berwick-upon-Tweed (Mr. Beith) set out earlier. It is reasonable, after 21 Tory tax rises—£1,000 a year for the average family—for the Chancellor to give back some of that money to the people from whom he has taken it. If it is £3 billion, that is fair enough, but a choice must be made as to how that —3 billion would best be spent. That is why on the Order Paper we have tabled our choice, which would bring the low rate of income tax, the first rate of income tax, towards 15p instead of the basic rate towards 24p.
I can claim fairly substantial credentials in arguing for a lower starting rate. I first put forward a proposal for a starting rate of 20p in the SNP budget before the 1992 general election. No sooner had I made that suggestion than I was pounced upon by the then Tory party chairman in Scotland, Lord Sanderson, who said that it was an idiotic idea and that no one would be convinced by
that sort of 0-grade economics.
Within two weeks, the then Chancellor encompassed that proposal in his 1992 Budget. Obviously, he was convinced by 0-grade economics.
This year, a week or so before the Budget, we said that it was time that the starting rate of income tax moved towards 15p. Our Budget was immediately attacked by the shadow Secretary of State for Scotland, who said it was a "back-of-the-envelope calculation". Within hours of that attack, the shadow Chancellor announced that he, too, now believed in moving towards a starting rate of taxation not of 15p, but of 10p. I was outbid by the shadow Chancellor.
I am confused by the Labour party's decision not to vote on the 24p tax proposal. I can understand that Labour does not want the Tories to claim that Labour Members are not interested in helping ordinary people through tax cuts, at a time when most family budgets are under severe pressure. However, what I cannot understand is why, having chosen a different priority from the Chancellor for tax cuts—a low starting rate—the Labour party did not put that on the Order Paper and vote against the Chancellor's proposal to reduce the basic rate to 24p.
It is quite clear that, if £3 billion is available for tax cuts, it is possible to lower the basic rate to 24p and to do a few other things on the side or it is possible to go for a 15p starting rate—but it is not possible to do both. By accepting the 24p proposal, the Labour party is excluding the 15p proposal from future calculations. Therefore, even at this very late stage, it would make me extremely happy if it reconsidered its position and voted against the 24p proposal. If there are tax cuts available, it would be better not to have them in a range from £50 to £1,000 a year depending on family income levels, but instead to consolidate those tax cuts at about £200 a year for most earners—as would happen if the low starting rate option were chosen.
I want to raise the question of VAT on fuel. Earlier this evening, I pointed out that when, on 23 January, the SNP moved an almost identical amendment to tonight's Labour amendment, the Labour party decided not to vote in favour of it—although one or two brave souls defied the Labour Whips.

Mrs. Margaret Ewing: Seven.

Mr. Salmond: My hon. Friend tells me that seven Labour Members defied the Whips. I welcome the fact that the Labour party has repented since its mistake in January.

Mr. Andrew Smith: Does the hon. Gentleman accept that the circumstances are entirely different? Our vote earlier this year was intended to ensure that VAT on fuel was held down to 8 per cent. By voting in the way that the SNP wanted, there was a possibility that we could have ended up with VAT on fuel at 17.5 per cent. We were not prepared to put our victory on VAT on fuel at risk for the sake of SNP gesturism.

Mr. Salmond: Earlier this evening, I heard the shadow Chancellor mumbling just that explanation to the deputy leader of the Labour party, who sensibly did not take it up. As the hon. Member for Oxford, East (Mr. Smith) knows, under the procedures of the House a clause must be agreed before an amendment can be made to it. The clause relating to 8 per cent. VAT passed without a Division, before the 5 per cent. amendment was called. The end result of Labour party posturing was that the opportunity to reduce VAT on fuel to 5 per cent. was lost. Perhaps the hon. Gentleman should apologise to the people who are suffering the consequences of that posturing rather than, 10 months after the event, coming out with some sort of lame explanation.

Mr. Smith: The hon. Gentleman should apologise for his remarks, as he will in due course when we exchange correspondence on this matter and I demonstrate that I am right. Is it not the case that, before the procedures that he mentioned, in law VAT was due to rise to 17.5 per cent.? We succeeded in securing an amendment to the Bill, which had not then been passed, to keep it down to 8 per cent. At that point, a wrecking amendment was moved to reduce it to 5 per cent. Will he accept that if there had been a possibility that the 5 per cent. amendment would be accepted, the Tories who voted with us on the 8 per cent. amendment might not then have done so, so the 8 per cent. option would have been lost, the 5 per cent. option would have been rejected and we would have been left with VAT on fuel at 17.5 per cent? That would have been the consequence of what the SNP wanted.

Mr. Salmond: That was not just the longest but the most convoluted explanation I have ever heard. I remind the hon. Gentleman that by 23 January the Chancellor had accepted an 8 per cent. rate. The Conservative party did not even divide against that rate. The only issue that remained to be determined was whether that 8 per cent. should be reduced to 5 per cent. The Labour party decided to sit and do nothing on that issue—as it intends to do again this evening on another issue—rather than take the opportunity to reduce the rate. No amount of post-match explanation can alter that fact. The only party changing its attitude is the Labour party.
I welcome Labour's belated conversion to a VAT rate of 5 per cent. on fuel. I will not refuse to go into the Lobby with the Ĺabour Members this evening just because it is now a Labour amendment to reduce the rate to 5 per cent. If the Labour party extended the same courtesy to other Opposition parties' amendments as we do to Labour amendments, opposition in this House would be rather more formidable.
My last point on the Budget proposals relates to increased tax on fuel. It is a serious matter for hon. Members who represent rural constituencies. This Chancellor and his immediate predecessor set targets of real increases each year in fuel duties of 5 per cent. over and above the rate of inflation. This Chancellor has excelled himself—there is to be an 11 per cent. increase in certain duties. Rural areas that are highly dependent on transport to get goods into the shops will face higher prices for virtually every item in every shop.
That is being done, as are so many things—including the original imposition of VAT on fuel—in the name of meeting environmental targets. In fact, it is being done for the much baser motive of getting as much revenue as possible for the Government. One official survey was quoted in The Economist:
Higher fuel prices will do little to cut congestion. A study of five cities—Leeds, Bristol, Sheffield, Derby and Reading—by the Transport Research Laboratory, a recently privatised research unit, found that even if fuel costs were raised by 50 per cent. there would only be a 3-4 per cent. reduction in urban congestion.
The evidence shows that the Chancellor's motivation is the revenue that can be gathered for the Government, rather than any savings in energy and fuel that could be guaranteed by such a punitive policy.
When the Liberal Democrats suggested something similar during the Kincardine and Deeside by-election in 1991, the Conservative party greeted it as the saving of its campaign. Tories in that rural community argued strongly that it was a punitive policy being pursued by the Liberal Democrats without regard for the interests of the area. However, the Liberal Democrats were actually suggesting compensation for rural areas. The Chancellor is not suggesting any compensation. The SNP will vote against the increases in fuel duties. I hope that, on this occasion, we will be joined by other Opposition parties.
I want to speak about the Budget in a Scottish context. I would argue very strongly that the Scottish economy has two significant advantages over the economy of the United Kingdom as a whole. First, it experiences a relative lack of inflationary pressures when the economy is running at higher levels of output than at present. In the late 1980s, recovery in the economy was arrested in the United Kingdom, especially in the south-east of England, by spiralling house prices and other inflationary pressures. That was not evident in the Scottish economy to anything like the same degree. There is much convincing evidence that the Scottish economy could be run at a higher level of output without succumbing to inflationary pressures.
The second major advantage, which was spelled out yet again today, is in the export performance of Scotland. Export productivity in manufacturing industry runs at a level around a third higher than that in the rest of the UK. Scotland's export growth is running much higher than that in the rest of UK. Per capita, Scotland exports more than Germany, Japan or the United States of America.
That is again a sign that the balance of payments constraint, which has been the undoing of so many Chancellors—and may yet be the undoing of this one—is not prevalent in the Scottish economy to anything like the same degree. Rather than the tame, lame affair that the Chancellor presented last week, a Scottish Chancellor, producing a Scottish Budget, could have introduced measures for output, growth, employment and for social justice.

Mr. Barry Legg: We are in the fifth day of the debate on the Budget. Having sat through some of the earlier days, I think that it is improving as the days go by—somewhat like England's performance in the recent test match. Tonight, Conservative Members have made a series of excellent speeches, beginning with those made my right hon. Friend the Deputy Prime Minister and by my right hon. Friend the Member for Guildford (Mr. Howell), and followed by my hon. Friends the Members for Hazel Grove (Sir T. Arnold) and for Portsmouth, South (Mr. Martin). They all made some fine points.
I should like, first, to deal with the remarks made by the hon. Member for Banff and Buchan (Mr. Salmond) at the beginning of his speech. I hope that the hon. Member now understands the Government's policy on exchange rates. There is no difference between the views of Conservative Back Benchers and Ministers. There is no difference between my right hon. and learned Friend the Chancellor and me, for example. We all believe in floating exchange rates. It is as simple as that. We have learnt the lessons of membership of the exchange rate mechanism and we now all believe in floating exchange rates. My right hon. and learned Friend the Chancellor has told the House again and again that he has no target for the exchange rate.
As for the comments of my hon. Friend the Member for Portsmouth, South on France, I would say that there is no benefit to the United Kingdom from France's maintaining an unrealistic exchange rate that damages the French economy and political stability there. I want Europe's economy to be healthy as a whole. I want France, which is a major export market for the United Kingdom, to do well and to prosper through political and economic stability. There is no difference at all on that point among Conservative Members.
The further we get away from the initial rhetoric on the Budget, the more constructive our debate becomes. I greatly welcome the measures that the Chancellor has introduced to control public spending, especially those in social security to restrict housing benefit and combat fraud. He rightly pointed out that projected social security spending over the next three years had been cut significantly.
The proposed social security reforms cannot, however, be the end of the matter. The Red Book shows that social security spending this year is being increased by £1 billion over previous plans and that, next year, it will increase by £1.2 billion over existing plans. Despite healthy economic growth for a number of years and the Treasury forecast of 3 per cent. growth next year, overall social security spending is set to increase by 4.5 per cent. in next year's estimates. That is one of the biggest expenditure increases announced in the Budget. There is plenty of scope for extra measures in that area and I hope that my right hon. Friends will continue to introduce measures to cut fraud and end the abuses that are rife among social security claimants.
Overall, my right hon. and learned Friend the Chancellor has made it clear that he is an adherent to firm control of public spending. There is, however, sometimes danger in making our rhetoric too tough. If the reality does not match the rhetoric, we do not benefit. Most people believe that the Government have been cutting

public expenditure, but the figures in the Red Book show that in no year has public expenditure been reduced in real terms. Treasury Ministers have sometimes planned to reduce public expenditure in real terms, but the reality is that it has increased in real terms each year, so we should not let our rhetoric become too harsh. It will not fool the financial markets and it might mislead voters.
Nevertheless, the Budget is much tighter than is normal a year before an election. It appears that the Government have learnt some important lessons on public expenditure, especially if one compares next year's spending with, say, the levels set for 1992–93. When my right hon. and learned Friend the Member for Putney (Mr. Mellor) had control of the nation's purse strings, public expenditure was increased in real terms by some 5.7 per cent. We have come a long way in controlling public expenditure and I applaud the levels set in the Budget.
The Labour party has derided Conservative achievements on inflation since 1979, but if anybody had said in 1979 that, under a Conservative Government, inflation could be brought down to a level that had not be seen for 40 or 50 years, that the horror of inflation—it was a horror for many people—could be brought to an end, everyone would have said that it would be a great achievement.

Mr. Michael Connarty: Does the hon. Gentleman recall that inflation was negative during the depression? People would not say that the country was exactly booming then.

Mr. Legg: I am not talking about negative inflation. Indeed, I am an advocate of ensuring that we do not have it. I shall make further comments on monetary policy later. Under the Conservatives, inflation has been brought down to a level that has not been seen for 40 or 50 years. Following the hon. Gentleman's comments, I am afraid that I must again remind the House that inflation reached 27 per cent. under Labour.
The prospects for inflation are good. In the coming year, it will fall further—because we have a very competitive economy. Competition is particularly keen in energy prices, for example. The electricity rebate—derided by the Labour party—will make a big difference to consumers. The productivity and efficiency savings achieved in the public utilities will work their way through to people's pockets.
Indirect tax increases have been substantially reduced, the mortgage rate is falling and many firms will begin to destock in the coming months. Those trends will provide further competitive pressures in the economy. It would not surprise me if inflation came down to between 1 per cent. and 2 per cent. over the coming year.
Some concern has been expressed about monetary policy, and especially about the growth in broad money, M4. It has grown towards the top of its monitoring range in recent months, but we should not over-worry about that trend. Developments in the financial world, such as the demutualisation of building societies and substantial takeovers, are important factors in that trend. There is not yet sufficient evidence to make us over-concerned about the current level of expansion of M4. The favourable inflation background should lead to further reductions in interest rates.
There are a number of forecasts in the Red Book to which I should like to draw the House's attention. I especially welcome the section that deals with the


economy in the medium term. It has been greatly expanded and I draw attention to it because it makes a number of important points. It highlights the substantial improvements to the supply side of the economy that have occurred during the past few years and the significant and substantial margin of spare capacity that still exists in the economy. It points to there being plenty of scope for non-inflationary growth in the economy and an improvement in the long-term trend rate of growth in the UK economy. The Treasury maintains that the sustainable long-term rate of growth in the economy has increased from 2.25 per cent. to 2.5 per cent. That is an extremely welcome development. Spare capacity and improvements in the supply side are safeguards against higher inflation in the medium term and provide the opportunity for the economy to grow at above the levels we have seen in recent months.
There has been considerable comment about the Treasury's projection of 3 per cent. growth in 1996. This morning, the Treasury Select Committee interviewed Treasury officials on that and other points. They maintained that it was possible to achieve that level of growth without further interest rate cuts. However, it appears that their assumptions on that score are optimistic. Their view is that exports will increase markedly in the coming year although the figures on world trade in the Red Book show that the rate of increase in world trade will fall. They have extremely benign views on the impact of reductions in stock levels in UK manufacturing and commerce and they hope for a reduction in the savings ratio.
It seems unlikely that a 3 per cent. rate of growth can be achieved without further interest rate cuts. The weekend press talked in terms of interest rate cuts of 0.25 per cent. I believe that, for confidence to come back into the economy and for the growth rate of 3 per cent. to be achieved, we shall need an initial interest rate reduction of 0.5 per cent. and, probably, further reductions as the months pass.
I draw attention to the comments of Professor Congdon, one of the Treasury's six wise men, on the 3 per cent. growth forecast. After the Budget, he said:
If GDP growth ran at 0.3 per cent. per quarter until the end of quarter 1 1996, the annualised growth rate in the remaining three quarters would have to run at 6 per cent. (ie. at a boom rate) in order to deliver the 3 per cent. growth figure projected by the Treasury for the calendar year as a whole.
Quite a lot must happen if that growth rate is to be achieved, especially as the growth rate for the most recent quarter was due entirely to stock building. As my hon. Friend the Member for Hazel Grove said, the Chancellor will have to make some further easing. The determination and good judgment that he showed last May in countering the views of the Governor of the Bank of England on interest rates will have to be brought into play again if our economy is to perform at a healthy rate next year.
There has been much talk in recent weeks about Iain Macleod and his legacy to the Conservative party. It has been right to bring lain Macleod to the fore. Some hon. Members might remember that he was the shadow Chancellor when the Conservatives were in opposition from 1964 to 1970. He had some extremely robust views on the level of spending in the economy and on the consequent level of taxation. In October 1965, he described his views as follows:
There is a limit, and that we are already beyond it, to the percentage that we can take of the GDP in public expenditure and to the burden that one can put on personal taxation without a dramatic drop in efficiency and enterprise and there I take my stand.
He said that there was a limit to the level of public spending that we could have as a proportion of gross domestic product and, consequently, a limit to the amount of taxation that could be borne to pay for that expenditure. He made his comments in 1965, when the level of spending by the state, which he considered unacceptable, was 35 per cent. of GDP. We are now battling with expenditure levels of 42 per cent. of GDP.
We see in the Red Book the consequences of setting expenditure at that level. Once it gets there, we have Budget deficits that generate extra interest burdens on the economy. Last year, public spending was 42 per cent. of GDP. The level of public expenditure this year is, again, 42 per cent. of GDP. If the state becomes very big, it is difficult to reduce its size—it acquires a momentum of its own. What is more, it becomes difficult to raise taxation to pay for the expenditure. That is what is happening at the moment. The Treasury has had to cut its forecasts of the amount of taxation that the economy will bear.
Last year, the Treasury forecast what revenue could be raised in the current year. In reality, the1 revenue take in the current year will be £8 billion less than was forecast. For the coming year, it will be £12 billion less than forecast. There are many reasons why tax revenues are down. Admittedly the economy is growing less quickly, but people also have a natural reluctance to pay high levels of tax. If high levels of tax are set, people seek shelters, and there are plenty of shelters in the UK economy, such as personal equity plans and occupational pension schemes. Many of us know that our constituents use far less orthodox shelters to escape higher levels of tax.
Part of the purpose of having a unified Budget was to take tax and spending decisions together. We shall have to look much more firmly at the spending side so that we do not impose excessive burdens that cannot be funded by taxation.
There are a number of other important changes set out in the Red Book. It has not been brought to the attention of the House that the Maastricht criteria on the budget deficit, which we were led to believe we would achieve in 1996–97, have now gone by the board. Paragraph 4.10 of the Red Book shows that, in the last full fiscal year before decisions will be made about membership of a single currency, the forecast for Britain's public spending deficit is some 3.5 per cent. of GDP. That exceeds the 3 per cent. Maastricht criterion.
How wise my right hon. and learned Friend was when he said in his Budget statement that the public sector borrowing requirement was the difference between two very large numbers. Forecasts are often missed by quite a wide margin. Basing so much of one's economic policy around trying to hit precise public spending deficit targets each year, in strict percentage terms, risks grave dangers for any economy.
We have not been able to meet our target for the PSBR in the current year because there has not been as much growth in the economy as we forecast last year. That is the problem that exists in France today. The French cannot meet the Maastricht criteria because they have to


hold down the level of growth in their economy to defend an artificial exchange rate which requires higher interest rates than the domestic economy can bear. If politicians pursue artificial criteria come what may, they will only drive their economies into deflation.
I note with pleasure what my right hon. and learned Friend the Chancellor said about the difficulties of forecasting the percentage of the Government deficit each year and I congratulate him on his stance at the Economic and Finance Council meeting some six or seven days ago. He met other European Finance Ministers the day before the Budget to consider the Waigel stability pact, which placed further requirements on member states to the effect that, if a single currency were to be achieved, they would no longer have to aim for a 3 per cent. budget deficit but for a 1 per cent. deficit.
Those of us who have argued that a single currency would reduce sovereign parliaments such as this one to no more than rate-capped councils could have no better example of what that would mean in practice than the proposals of Herr Waigel, the German Finance Minister. I am relieved that my right hon. and learned Friend opposed those proposals, and I hope that he will continue to oppose any similar ones put before European Finance Ministers.
The Budget is another welcome step in rebalancing the economy. Further steps must be taken to ensure that it achieves the forecasts for the coming 12 months that are set out in the Red Book. If we are to achieve them, there will have to be further interest rate cuts to bring further confidence to British business and consumers. When we get to next November's Budget, I am sure that we shall see a further instalment of the Chancellor's prudent management, which will enable the economy to generate considerable growth during the remaining years of the century.

Mr. Roger Godsiff: I have always believed that Budgets should be judged by the reaction from one's constituents. My constituents are interested not in figures in the Red Book but in facts in the real world. Last week's Budget did not bring about great dancing on the streets of Small Heath or the rest of Birmingham. Indeed, it brought a rather long yawn, but behind the yawn there was real anger. Once again, the people of Birmingham have seen missed opportunities.
My constituency is one of the most deprived in the country. On all the indices of deprivation, Small Heath comes near the top of the list. There are 6,632 people unemployed in my constituency. Male unemployment is 26.2 per cent. Overall unemployment is 19.9 per cent. of the working population. Small Heath has one of the largest numbers of single-parent families in the country.
What has the Budget done for people in my constituency? I put aside the comments made in the traditional Tory newspapers such as, in The Sun:
It was about as inspiring as a cold kipper",
in The Daily Mail, "Where is the magic?" and in The Daily Express, "too little too late." I put those comments to one side and judge the Budget against what it does for the unemployed, the deprived and the single-parent families in my constituency. The Budget abolished the community action programme. That did

not do much for the unemployed. Likewise, the 4 per cent. cut in job training. The freezing of one parent benefit did not help single-parent families very much. While 27p off a bottle of whisky is to be welcomed, it does not have much effect on my constituents. Nor does the 1p off income tax.
We have heard the Chancellor say on a number of occasions that this is a Budget for recovery. The Conservative party has been in power for 16 years, so what is the recovery from? Is it recovery from the stewardship of the Chancellor's predecessors, Mr. Howe, Mr. Lawson, Mr. Major and Mr. Lamont? Is it recovery from the ravages of Thatcherism? If that was the case, the Budget could be welcomed, but I regret that it has nothing to do with any of those things.
The Budget that we heard last week did nothing to deal with the real problems of the economy because the economy remains fundamentally weak. The Budget has done nothing for private investment while public investment has been slashed. The forecast for investment growth is 1 per cent for 1995 and for 1996. The forecast for overall growth in the economy has been revised downwards to 2.1 per cent. The deficit in the balance of payments is forecast to increase to £6.5 billion in 1995.
In addition, as has been pointed out in this long debate on the Budget, the overall level of taxation has increased since 1992 by the equivalent of 7p on income tax. So a typical family now pays £670 a year more than when the Tories first came to power.
During all that time, the taxpayers of Britain have had to bear the cost of £20 billion a year to keep more than 2 million people doing nothing. The figure of 2 million is, if the House will forgive the pun, a conservative estimate. As everyone in the country knows, the employment statistics are fiddled. They have been changed so often by the Conservative party since it came to power that they have no credence whatever. The real level of unemployment, particularly in many of the unemployment blackspots, is now far higher than the official figures suggest. That is the price of 16 years of Conservative rule.
Let us consider the one thing that the Conservative party always used to be able to boast about—the public sector borrowing requirement. There is nothing wrong with borrowing to invest. Indeed, I look upon it as good housekeeping, as did a previous occupant of No. 10 Downing street. However, at present we are not investing in the future.
Investment growth is forecast to go up by only 1 per cent. next year and 1 per cent. the year after. The public sector borrowing requirement is scheduled to increase to £29 billion, despite the benefit of the proceeds of North sea oil and privatisation, purely because of the failure of the policies of the Government—the lack of growth in the economy and the huge cost that the public purse has to bear for keeping well over 2 million people unemployed.
The Budget did nothing for my constituents. What was last week's charade really about? It was all about the next general election. More than anything else, it was about the Conservative party trying to save as many seats as possible. The Chancellor had to appear restrained this year to be able to indulge in a massive give-away extravaganza in the Budget next year. If this Budget shows anything, it is that the next general election will be held in April or May 1997. This is an a cast-iron certainty.


The right hon. Member for Fareham (Sir P. Lloyd) is not here, but I have great respect for what he said. He let the cat out of the bag. He referred to the 1p income tax cut working its way through into pay packets in April 1996. That is right. That is when it will come in. The 2p or 3p tax cuts which are going to be introduced in next year's Budget will look good in pay packets in April 1997.
The Tory party has always believed that it can con its way back into power. It believes that it can fool most of the people most of the time. Next time, the people will see through the con trick being played on them. They will see through the 2p or 3p tax cuts that will be offered up in next year's Budget.
The people will—I am sure that the Opposition parties will remind the electorate of it again and again—look back to the highlight of Tory economic policy in this Parliament. That occurred on so-called black Wednesday in September 1992. What a glorious day that was for the country and the Government. There were two increases in interest rates in one day; billions of pounds of the country's money was poured down the drain as the Chancellor fought as hard as he possibly could to stay in something that the Prime Minister took us out of at the end of 24 hours. It was an absolute shambles from one end to the other. That is the Government's record.
In the ensuing three years, the Tory party has attempted to try to recover from the disaster of September 1992. It will offer any bribes or incentives to try to buy the electorate next time. I believe that the people have seen through the Tories. Certainly, my constituents do not want 1p off income tax or 27p off a bottle of whisky; they want a general election.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): There are 85 minutes available before the Front Bench winding-up speeches and eight hon. Members hoping to catch my eye. I hope that they will all be successful.

Mr. Neil Hamilton: We have had a serious and thoughtful debate. Of course, only a handful of discriminating hon. Members are here to participate in the event and hardly anyone is here to report it. We have at least the comforting knowledge that we are talking to posterity. Talking of posterity, the last time that I was able to participate in a Budget debate was in 1990. I took the precaution of looking up my speech on that occasion on 1 May 1990—on what the Labour party used to call May day but about which they are no longer keen to be reminded.
Lord Rosebery, the former Liberal Prime Minister, once said that nobody reads old speeches any more than they read old sermons; the more glittering they were at the time, the more dolorous the quest. I was pleased to read what I said on that occasion because it will help me put this year's Budget in the perspective of history.
In the period running up to 1990, we were in the opposite stage of the economic cycle to the one in which we have found ourselves recently. It was a period of runaway boom following the rapid expansion of the money supply in 1987. To compare 1986 with 1987 will perhaps help to explain why we are in our present circumstances.
Through the whole of 1986, M3 expanded by less than £200 million whereas in March 1987 alone there was an expansion of nearly £1 billion; in April nearly £2 billion; and in May, nearly £3 billion. That was a case of pouring petrol on the flames if ever there was. Why did it happen? We were shadowing the deutschmark and were effectively members of the exchange rate mechanism, although we dared not admit it. The consequence of that was the runaway boom which we then had to counteract. That gave us three years of painful recession from which we have been slowly and gradually emerging, but it has been patchy progress.
All those years ago, before we joined the ERM, on Second Reading of the Finance Bill in 1990, I said:
Joining the ERM is no soft option. We have a choice. Either we can use interest rates to stabilise the currency, in which the case the economy will go up and down, or we can stabilise the economy, in which case the currency will go and up down. There is no way of wishing away that distinction and that choice."—[Official Report, 1 May 1990; Vol. 171, c. 969.]
Unfortunately, we made the wrong choice on that occasion and joined the ERM—enthusiastically supported by virtually every Opposition party, all of which wanted us to go in earlier. The Liberal party is still committed to that and, so far as one can discern from its policy pronouncements, even the Labour party is committed to shoving us back into that hell-hole.
It is a tragedy that virtually the whole of the last Parliament, and the whole of this one, has been consumed by that fundamental policy error, which has had tragic consequences for our party. It has wrecked our public finances and our party's reputation for good housekeeping because of the £50 billion deficit that we have had to massage down by tax increases that we would never have wished to bring in. It has pole-axed home owners and small businesses. I have had no need to dilate upon the property slump and its effects. That is again painful for Conservatives who had hoped that the economy would be run in a different way. It compromised our tax-cutting image and reversed, for a time, our policy of rolling back the state.
I very much agree with what my hon. Friend the Member for Milton Keynes, South-West (Mr. Legg) said. For all the talk about cuts in public expenditure, over all the years we have been in office since 1979, there have never been any cuts in real terms in public expenditure. One has only to consult table 6A.1 at the back of the Red Book to find all the figures. In every year without exception, there has been a real-terms rise in public expenditure. Consequently, we have not been able, until this year, to re-embark upon those long-term Tory policies which were so successful electorally in the 1980s and which I believe can still win us the general election when it comes in 1996 or 1997.
It is certainly instructive to look across the channel at what is happening to the French Administration as the people of France grapple with the Procrustean bed of the Maastricht criteria. That is utterly perverse because the French economy is in severe recession and the French Government are embarking upon an unprecedentedly contractionary fiscal policy which will exacerbate the recession and turn it into the sort of slump, to which the hon. Member for Falkirk, East (Mr. Connarty) referred, that occurred in the 1930s. That was caused precisely by the contractionary policies of the Federal Reserve Bank—an independent bank, independent of politicians.


Wrong-headed policies were followed to the immense cost of an entire generation before the war —a mistake which we will, I hope, never make again.
The Banque de France is now no more than a branch office of the Bundesbank and, as in 1940 to 1945, French economic policy is actually being dictated from across the Rhine. The French people have no voice, and the only way in which they can make their protest is on the streets. That is exactly what many feared might happen as a result of the theories that underlay the Maastricht treaty. They feared that as a result of attempting to enforce an artificial straitjacket on something which cannot be constrained by law, we would not make decisive moves towards the unity of Europe, but break its existing institutions and political structures.
I am delighted to see in the Chamber the Minister of State at the Foreign Office. He is conducting a rearguard exercise at the moment in Europe; he is trying to shine a searchlight of common sense upon the horrors that we see developing, and which for some extraordinary and incomprehensible reasons the political elites of the rest of Europe seem incapable of seeing.
We have been in a fortunate position ever since golden Wednesday 1992. As a Government we have been able to pursue our own independent monetary policy, which has been a tremendous success story. My right hon. and learned Friend the Chancellor of the Exchequer will go down in history—perhaps rather surprisingly to some of us—as a sane, sensible and well-balanced Chancellor. He will have solid achievements to his name so long as he does not dart off into the theological complexities of the issue to which I just referred. I think that his tenure of office in this Parliament will demonstrate what strengths come through for a country when it determines its monetary policy according to its own needs. That is why I think we need to have further reductions in interest rates.
The Chancellor's good sense was demonstrated in the summer by the way in which he stood up to the Bank of England and refused to increase interest rates as the Governor wanted. I have the greatest admiration for the Governor, who recently gave me a free lunch at the Bank. I am not sure whether that disqualifies me from speaking in the debate under the new criteria. It was a jolly good lunch and, once one builds into it all the hidden costs and overheads of the Bank of England, it may well have breached the expenditure thresholds laid down in the Register of Members' Interests. That is something that Sir Gordon Downey may need to look at.
Technocrats who run policy as sensitive as monetary policy effectively run the whole economic policy of a Government, because that is the framework within which all other tax decisions are made. That is a recipe for disaster because technocrats arrive at the wrong conclusions, perhaps by more scientific methods, and when they do so, there is no democratic means of calling them to account. That is why in France today the Government are not being made accountable through the ballot box but by riots and demonstrations on the streets. That was exactly our experience under the last Labour Government. Such lack of accountability is not a recipe for success but disaster, and one that we should certainly avoid.
I welcome very much the return to the tax-cutting-agenda. The Budget should be judged according to the long-term perspective to which I referred at the beginning of my speech. All economies go up and down. There are

economic cycles that cannot be wished away, and certainly cannot be legislated against. In this Budget, and those that preceded, we were obliged to increase taxes in order to maintain a reasonably balanced budgetary policy. Those increases should be seen as part of our long-term objective to reduce the proportion of national income taken by the state from the taxpayer, and spent for him on priorities that politicians rather than the people decide.
The last three Budgets taxed our economy virtually to a standstill, and even in the past three years growth has faltered from time to time. There is still a significant feeling of insecurity in the country. People fear for their jobs in the future and are anxious about the costs that they might have to encounter in their declining years. All sorts of reasons of that kind explain why the so-called feel-good factor has been elusive over the years.
The most obvious reason for the relative lack of a feel-good factor is to be found in a table that appears in the "Economic Trends" annual supplement, which was published only last week. That table shows the figures for disposable income per head of citizens in this country. If we look at the period from 1985 to 1990 there was about a 13 per cent. increase in real personal disposable income. In the period from 1990 to 1995 that figure had dropped to less than 5 per cent. The bulk of the growth in that time has occurred in the last few quarters, so it is clear that throughout most of those five years people have been worse off than they were at the height of the boom in 1990, or only marginally better off. No wonder people have felt sore at their experiences.
I have explained why we found ourselves in such an unfortunate position, and it is not a mistake that, I hope, we will make again. The Government do not have an exchange rate target, and although it is right to consider the exchange rate as one of many ingredients of economic management, it should not be given undue weight.
We have not, seen any real spending cuts in the past 16 years, let alone recently. The Government's expenditure overall has been planned, from start to finish, to rise by about 12 per cent. in this Parliament compared with 4.5 per cent. in the previous Parliament. We have been far less stringent in our of control of public expenditure—partly because of the recession—in this Parliament than in the previous one. It can hardly be a credible allegation against the Government that we have been unduly Scrooge-like in our control of public expenditure.
Labour Governments are very much better at cutting public expenditure than Conservative ones because they have a little external help. That was clear after the 1967 devaluation, and after Denis Healey's famous trip and swift return from Heathrow airport back in 1976 when the IMF came on board. In the two years following that, the Labour Government were able to make a 7.5 per cent. cut in public expenditure in real terms. That was a considerable achievement. If Lord Healey were invited to become a consultant to Her Majesty's Treasury, he might have some useful tips for my right hon. and learned Friend on how to keep public expenditure under control.
Public expenditure has gone up by a significant proportion. I do not underestimate the difficulties of controlling it. I have been on the inside of government and seen the pressures on Ministers to push up spending. I know that with demand-led programmes it is even more difficult to exert control over that discretionary part of Government expenditure. If we are to deliver our


long-term objective to reduce the role of the state in people's lives, and return to them the freedom to spend the money that they earn and the wealth that they create in the way that they choose, it is vital that we make better progress on controlling public expenditure.
We needed a bold Budget. It is a good Budget as far as it goes, although I would have preferred it to have been a little bolder. I do not make any great criticism of the Chancellor on that count. There are difficult judgments to strike, and no doubt we all have different views about where the balance of advantage lies. A number of fundamental features underlie the Budget, and everybody should recognise that they should incline us rather less towards caution on tax cuts and interest rate reductions than otherwise. For example, there is no inflation risk at the moment. Last year, the price of raw materials rose by 5 per cent. and more. There was a fear that that would feed a wage-price spiral, with all sorts of shortages and bottlenecks developing, but that simply did not happen. The retail prices index rose by a little more than 3 per cent. When one looks at what happened to wage rates last year, however, that shows where the fundamental weakness in our economy lies. Wage increases actually fell from 4 per cent. to about 3.75 per cent. and in some cases wages decreased in real terms. The present inflation suppression mechanism is the result of many of the policies that we have introduced in the decade and a half that we have been in government.
We have a more flexible labour market than we had in 1980. If the Opposition were to win an election, they would make it more rigid again with such innovations as signing up to the social chapter, introducing minimum wages and, no doubt, returning some privileges to the trade unions. A flexible labour market, relaxation of rent controls, deregulation of working conditions and toughening up the benefits system—in which we have much further to go—have become crucial to our ability to grow and compete without inflation.
The evidence is clear not only in wages, but in the unemployment figures and the resurgence of manufacturing exports and inward investment. Who would have thought that we would ever again export televisions and become a major exporter of cars? It is clear that there would be little justifiable fear of inflation were we to relax the controls just a little more.
The United Kingdom has become the most successful country in the world after the United States in attracting overseas investment. In 1979, the figure was £22 billion; in 1994, it was £144 billion. That is a sevenfold increase. More than 3,500 United States companies, including 98 of the Fortune 100 companies in the United States now have operations in Britain. The three largest car companies in Japan have secured bases here and 40 per cent. of Japanese investment in the European Community is in Britain. More than 1,000 German companies are in Britain, representing 12 per cent. of all German investment overseas. In the past two years alone, more than 800 inward investment projects have brought 200,000 jobs to Britain.
That has not happened of its own accord or because companies stuck a pin in the map and decided to locate to Britain. They located here for the hard-headed reasons that we have a low-tax, relatively deregulated economy that is no longer inimical to wealth creation and is not

suffused by the miasma of envy politics and the destructive trade unionism of the 1970s that repelled them from our shores.
What is lacking today, or is insufficiently to be found, is a recovery in domestic demand. We need to build on the useful measures contained in the Budget with a further reduction in interest rates, as recommended by my hon. Friend the Member for Hazel Grove (Sir T. Arnold).
This has been derided by Opposition Members as an attempt to bribe the electorate, but I do not regard returning what people have created for themselves and rightly belongs to them as a bribe. Bribery occurred under previous Administrations—Tory as well as Labour—when ordinary people were made a fraudulent promise that they could get something for nothing and were gulled into believing that the rich would somehow pay for vast increases in expenditure on health, education and social security.
The tragic reality is that as the welfare state and the role of the state generally has expanded over the past few generations, ordinary people have had to pay the bills themselves. As a result, they have been deprived of the freedom to choose, and that has become the privilege of the few. We have to alter that. We have taken some decisive steps in the right direction, but we have much more to do.
It is projected that there will be a surplus on Government accounts by the end of the century. If surpluses are in prospect, we can cut taxes to a level at which borrowing is sustainable without worrying. It is a pity that my right hon. and learned Friend the Chancellor committed himself to a zero borrowing requirement in such a short time. Were it over a longer period of time, we would have had far more leeway sooner for significant tax cuts, which, as we know from our experience in the 1980s, have advantageous supply-side effects.
The Chancellor was prudent in not changing his projections for the PSBR, but had he taken a little more risk on that, we could have done a lot more this year. Patrick Minford has suggested that as much as £17 billion would have been available on a rolling tax cut programme over three years, had we adopted a rather more lenient view of borrowing in the next five or six years, but we cannot do everything at once.
Many Opposition Members fail to recognise that tax cuts produce wealth. Even after the dramatic reductions in the top rates of tax in the 1980s, not only did more revenue come into the Exchequer for redistribution, but the proportion of income tax revenues paid by those on higher incomes actually increased. It is a perverse policy to call for punitive increases in taxation because the consequences are that there is less money to redistribute and the rich pay a smaller proportion of the total tax revenue. We have a long way to go, but low-tax countries always lead the growth league.
When the United Kingdom was the leading low-tax country in the world between 1780 and 1890, we topped the growth league. The same occurred in the United States between 1890 and 1970. Today, countries such as Japan, Switzerland and certain far eastern countries—the Asian tigers—have low-tax, deregulated regimes which put them at the top of the growth league. We should look to that example and not to countries such France and Germany—the over-regulated sclerotic regimes that are attempting to force their uncompetitive policies on us because they are


too frightened to adopt or have some other reason for not adopting the sensible, open-market, outward looking, low-tax, deregulating policies that have been so successful here and elsewhere.
Labour is trying to project itself as the party of tax cutting. A recent article in the Daily Telegraph was headed
Blair: 'I will not squeeze the rich'".
The Leader of the Opposition said that in his speech to the CBI. The hon. Member for Dunfermline, East (Mr. Brown) recently laid out his stall for a 10p income tax rate—admittedly to the annual conference of the British Dyslexia Association, perhaps thinking that the audience might not be able to read the fine detail of his policies, although I say that with some trepidation as I know that the debate was opened by my right hon. Friend the Deputy Prime Minister. The 10p income tax rate has been derided as a gimmick by the Institute for Fiscal Studies.
Opposition Members do not seem to understand the mechanisms that achieve the policy objectives that they themselves set. The best way to help those on the lowest income is not to introduce a band of tax at 10p but to raise tax thresholds, as my right hon. and learned Friend has done this year, to take out of the tax net as many people as possible who are on the lowest levels of income, because the greatest disincentive to work is provided not by the tax system but by the benefit system due to the combination of the withdrawal rates and the tax rates which apply at that level of income. There is much to be done on that side of the equation.
We need to continue in the direction that we are now taking. We are getting back to the policies on which we were elected in 1979, to which we have adhered and which have been so successful for Britain and have made the Conservative party so electorally successful. The greatest tribute to the truth of that analysis is that the Opposition have now discovered that they cannot be elected on the policies in which they really believe and therefore they have to present themselves as a watered down version of Tories.
Looking at the right hon. Member for Sedgefield (Mr. Blair) and his supporters in recent months, I have been struck by the right hon. Gentleman's resemblance to Sun Myung Moon. When the moonies sign up to their cult, they have to accept the Reverend Sun Myung Moon's decision as to who they marry. He spends quite a lot of his time looking at photographs and selecting and matching the couples who are to spend the rest of their lives together. That role is being performed by the Leader of the Opposition in the Labour party as he matches his members to their new beliefs. They may not have had much connection with them in the past or any understanding of the matters that they now profess to believe, but so desperate are Labour Members to achieve office that they are no longer concerned about what they would do there.
We see in Labour a bankrupt party which has plenty of experience of bankrupting the country. That is why I hope that my right hon. and learned Friend the Chancellor will continue the successful policy that he is adopting, which will be the best prophylactic against the country ever again entrusting the Opposition with the levers of power.

Mr. Ray Powell: I was present for the speeches at the start of the Budget debate and have listened attentively to other speeches during the course of the week. I left the Chamber earlier to attend a meeting of the parliamentary benevolent fund, at which we presented ex-Members of Parliament or their widows with more money than the Chancellor are giving them, and more money than the Chancellor will be offering people throughout the country. The beneficiaries of our benevolent fund will receive a Christmas box of £500. Many pensioners in my constituency would love to be afforded a £500 Christmas box from the Chancellor.
What is the Chancellor offering, and what is he taking back, and how will that affect my constituents and Wales? The House and the country realise that the Budget pretended to offer a lot to the people. With respect to the hon. Member for Tatton (Mr. Hamilton), Labour will not be running afraid of the Government at the next general election. We are positive in the policies that we want to pursue. I do not know the hon. Gentleman's majority, but I am sure that it will have to be good for him to retain his seat at the next general election—especially after this year's Budget.
Newspaper reports following the Budget, especially that in the Financial Times, and the state of the pound immediately after the Budget was announced, proved conclusively that the array of Order Papers waved by Government Members was a farce. As soon as Conservative Members read the details of the Budget, they realised that there was not sufficient in it to allow those right hon. and hon. Members to regain their popularity with the electorate. I would not be so complacent as the hon. Member for Tatton. If he thinks that Labour's lead in the opinion polls can be reduced within the next 18 months without a giveaway Budget and a substantial reduction in interest rates, he is living in cloud cuckoo land.
When I entered the House 16 years ago—you, Mr. Deputy Speaker, were here long before, and it can be seen that we are aging—there was a lengthy list of hon. Members waiting to participate in the Budget debate. In the years that followed, most Budget debates were well attended. The Chamber would not be empty but fairly full. Things have changed. When one examines the Budget, one can understand why the Chamber has not been well attended this week.
When the Chancellor presented his Budget, he suggested that the family on average earnings would be better off next year by £450, which he said was the equivalent of £9 per week. Since then, the Chancellor and the Conservative party chairman have admitted that that large promised improvement was false.
The Treasury press release on Budget day made the inaccuracy clear. It stated that the tax changes would be worth an average of just over £2.80 a week. The day after, the Library—whose figures give me far more confidence—suggested that the average family would be approximately £2.08 better off. In exchanges earlier between the Chancellor and my right hon. Friend the deputy leader of the Labour party, it was plain that the right hon. and learned Gentleman's figure was based on rosy forecasts rather than grim reality.
Living standards have fallen over the past five months—more than at any time in 40 years. After this Budget, the typical family will still be £670 worse off


than at the time of the last general election. The Chancellor's figures cannot be trusted. One year ago, he stated that public borrowing in 1996–97 would be £12 billion. Now he states that it will be nearly double—£22 billion. Last year, the Chancellor predicted that investment would grow this year by nearly 6 per cent. Now he says the figure is just 1 per cent. Also last year, the right hon. and learned Gentleman said that the economy would grow by 3.25 per cent. this year. Now he admits that growth is running at only 2.75 per cent.
The Chancellor argued, in exchanges with my right hon. Friend the deputy leader during his true and excellent assessment of the Budget, that the Budget was all about putting extra money in people's pockets. What extra money—the £9 that the right hon. and learned Gentleman mentioned when he presented his Budget, or the £2.08 that the Library calculated?
Where are the tax cuts that the Chancellor talked about? Conservative Members waved their Order Papers when the right hon. and learned Gentleman sat down, but, having analysed his speech, they began to realise that they must start looking for a job with a friendly company or a bank, because no way can they win the next general election and hold on to their seats.
As to increases in local government charges, the Secretary of State for Wales stated in a letter to my right hon. and learned Friend the Member for Aberavon (Mr. Morris) that an 11 per cent. increase will be imposed on rates in Wales, which will mean an increase of £35 a year for the average ratepayer. What kind of tax cut is that? To burden the new unitary authorities in Wales, with all their new responsibilities from 1 April, with an 11 per cent. rates increase is absolutely disgraceful, and should seriously be further considered.
What does this Budget do about job insecurity, or about expensive bureaucrats in the NHS? What are the Government's proposals to solve the negative equity problem in the housing market? Yesterday, my hon. Friend the Member for Newport, East (Mr. Hughes) referred to the "Kane" programme, so called
because that is the name of its distinguished presenter, Mr. Vincent Kane, who has not exactly made a reputation for himself as a Labour supporter. A fortnight ago the programme dealt with poverty and made a convincing case for Wales to be described as the most poverty stricken area in western Europe, certainly on a par with some of western Europe's most devastated areas such as are found in Greece, Portugal, southern Spain, Sardinia and the former East Germany.
Once vibrant communities in Wales have been totally decimated. In addition to massive unemployment, officially registered and otherwise, wages are deplorably low. If ever there was a case for a minimum wage, it could certainly be made for Wales.
After my hon. Friend had spoken, the hon. Member for Sutton and Cheam (Lady Olga Maitland), who is not in her place now, asked him to apologise to the people of Wales:
I cannot believe that they would thank the hon. Gentleman for describing them as living in an impoverished state and equating them with some grossly chaotic country overseas. I would be furious to be put into such a category, and I hope that the hon. Gentleman will later apologise to the people whom he represents."—[Official Report, 4 December 1995; Vol. 268, c. 78-80.]
My hon. Friend's experience, however, does not differ from my experience of my constituency. During the 16 years of Conservative rule, seven collieries there have been closed, making 8,500 miners redundant. The decommissioning of the Port Talbot steelworks put 12,000 steel workers out of work. That makes a total of 20,500 redundancies between 1979 and the end of the miners' strike in 1984. Without economic planning, no constituency could recover from such a blow. Perhaps the hon. Member for Sutton and Cheam, who criticised my hon. Friend, should travel around the country and visit parts of Wales to see the deprivation and squalor there.
People of all political opinions have said that this Budget was a wasted opportunity. The overwhelming majority of people have found their concerns completely ignored. What measures were included to alleviate the insecurity felt by so many families in respect of jobs, housing, education, hospital services, social security, and increasing drug abuse? That is not to mention the Government's staggering record of failure with bodies such as the Child Support Agency, which has already claimed 35 wasted lives. The Act that set it up should be scrapped as a matter of urgency. In numerous measures, the Government have moved rightwards so as to put clear water between themselves and the Opposition.
Most Opposition Members, like me, wanted positive steps taken to solve the problems in their constituencies and in the country at large. Our constituents, especially the unemployed, are crying out for help. Some of them in my constituency have been unemployed for 10 years or more. Young people leave education with loans hanging over their heads and degrees in their pockets, desperately seeking work.
The Ford engine plant in Bridgend announced a few weeks ago that 480 new jobs were to be created under a £340 million expansion programme. It was reported that 11,600 people applied. That means that 11,120 of them are still looking for work in Ogwr borough. This part of Wales has suffered greatly over the past 16 years, and I greatly doubt that it will recover under the Chancellor's economic plans.
No one will be fooled: this is not the Budget of a Government who have succeeded. After 16 years, they have signally failed, as shown by rising taxes, declining living standards and public services, and increased borrowing. The Budget was the last gasp of a degenerate regime.
We say that the only long-term solution to our unemployment and public spending difficulties is investment to strengthen the economy, a radical welfare-to-work programme, and a fair tax system that rewards hard work. Only by putting people back to work will we build a strong economy. The Tories should have adopted Labour's plan for a windfall levy on the utilities. Then we could have begun to break the logjam of unemployment and to reduce the price that we are paying for failure. That is the only route to better public services. I am sure that the Labour party will use the next 18 months to campaign for what we are advocating.

Mr. Edward Leigh: After a week of debates on the Budget, an essential truth remains: given expectations about public services and the level of Government borrowing, the Chancellor had very little room for manoeuvre. Hence this was an honest, shrewd Budget, and I congratulate my right hon. and learned Friend on it.
In the few minutes I have, I want to deal with some of the difficulties and paradoxes facing the Chancellor and those who manage our public finances. The three problems with which I shall deal are also electoral problems for us.
First, assuming that the figures given me by the Library are broadly correct, the average married man with two children will be paying £150 more in tax and £217 more in national insurance in 1996–97 than he did at the time of the last general election. Doubtless the Labour party will make great play of that. But what the Labour party will not say is that the same man's wages will have increased in real terms by £558, and he will be paying £675 less a year for his mortgage, because of cuts in mortgage interest rates. He will therefore have £877 more in his pocket. That is the honest truth as far as I have been able to determine it from all the conflicting statistics of the past week.
The fact remains that this average married man will be paying more tax—a challenge that will face the Chancellor before his next Budget. Let us assume that every 1p reduction in the base rate gives my average family man £130 more in his pocket. Let us also assume that he will be paying about £367 more in tax by the next election than he did at the last. Thus, to wipe out the tax increases, and to present us with an attractive electoral message, a 3p cut in the base rate will be needed in the next Budget. That is a very great challenge, because, as my hon. Friends the Members for Tatton (Mr. Hamilton) and for Milton Keynes, South-West (Mr. Legg) made clear, with every year that passes, public spending increases. That is the first paradox and dilemma that faces the Chancellor as he wrestles very ably with these problems.
The second is concerned with the married man's tax allowance and mortgage tax relief. Again, there are numerous conflicting figures, but from the evidence that I have been able to glean, it seems that that allowance, which was worth £430 in 1991, is worth £268 today. If the cuts since 1988 had not taken place, a married man would be paying £878 less for his mortgage. That is a powerful weapon, which the Labour party will use.
The only reply that we can make is that what counts is not the tax that a married man pays but also what he takes home. As I said, his mortgage, because of the cut in the base rate, has been reduced by £675. I do not see how we can reverse the long downward trend in mortgage tax relief that we have seen over the past seven or eight years, but we can begin to reverse the cuts in the married man's tax allowance. I say that for good political reasons, because we have to give the powerful message that we are the party that supports the married man. It is perfectly possible, and I beg the Chancellor and the Chief Secretary, as they plan their strategy for the next year, to consider those points.
The third problem is what I call the four ages of man, and why we are slipping so badly behind—apparently—in the opinion polls. Although they feel that they have made adequate contributions for their old age through

their national insurance contributions, the elderly are increasingly concerned that those contributions—as people live longer and expectations are greater—are insufficient to cover their needs. Therefore, what the Chancellor did with nursing homes was very shrewd.
The elderly also feel that some people—they blame in particular unattached teenage mothers—are taking the state for a ride. That may or may not be fair criticism—I do not want to get into that debate—but the elderly blame other sections of the community for what they consider an unfair attack on the resources of the welfare state. They blame the Government for making them contribute more.
The next generation down—those in their 50s—are increasingly concerned about job insecurity. They may well blame the Government for that, although it has very little to do with the Government. The generation in their 30s and 40s are concerned about negative equity, and, of course, the young are always impatient.
So in those four ages of man, one sees that there are enormous problems for the Government to deal with. The only solution for us is simply to be honest and to look at the Budget, to look at what we have tried to achieve, to look at our place in the world trading economy, and to tell the truth: that, in terms of real take-home pay, the average man will be better off.
But we have to do more. I say to the Chancellor that we are laying the foundations for a new socialist consensus if we argue that we can continue the present structure of the welfare state. I am not sure that that will be possible, because expectations will rise so fast that I do not think that we will not be able to meet them.
Therefore, we must have the courage to indulge in fundamental reform of the welfare state, because the Labour party will always be able to promise to spend more on health, education and social security. I do not think that we will ever be able to match its promises. That again is a fundmental problem that we face in terms of electoral popularity.

Dame Elaine Kellett-Bowman: It would appear from the opening speeches that the Labour party may make all sorts of promises, but one of them is a 60 per cent. tax rate, which will not be very attractive to the British people.

Mr. Leigh: That is true, although we can always hope, of course, that the Labour party will shoot itself in the foot, as it did in the run-up to the previous election. But I do not think that we can necessarily rely on that.
I think that we will solve the long-term dilemmas and paradoxes that face us in the management of the welfare state. We have to be prepared to look in the long term at very radical reform. There is no big bang or instant solution in the reform of social security, given that expectations are rising all the time. Nor is it possible to argue in a simplistic way that we can deliver tax cuts and ever-improving standards in health, education and social security, which is what people want. That is a simplistic point of view. The fact is that people want to spend more on their health and on education. It is easy to argue that there is room for huge cuts in social security, until one bears in mind where the money is being spent: on the disabled, pensioners and so on.
Much of the debate is conducted on an entirely simplistic basis that has no reality in fact. The only way in which we can try to fight our way out of these


dilemmas and paradoxes in the management of the welfare state is to look for management and efficiency savings, and at where it is possible to privatise. All that is possible, but perhaps we are coming to the end of the road on that.
I believe, though, that there is a new, extraordinary consensus, which is coming from right and left: from the hon. Member for Birkenhead (Mr. Field), who heads the Social Security Select Committee, and from people like myself on the right, who argue that one has to reinforce individual responsibility in the management of the welfare state.
One has to try to create more of a community. I do not propose that we privatise the welfare state; there simply is no public support for that. There is no support either for privatising the national health service or state education. Where individuals make contributions towards their old age or for education, there is support for the idea that they receive much more personal credit than they do at present. At the moment, they believe, rightly, that their contributions are just poured into a bottomless pit. They are given no credit for their contributions.
They feel, frankly, that other people are taking the state for a ride. It would be an immensely complicated process. It would have to be a rolling programme. There is no way in which one could introduce it in one Budget, two Budgets, or even five. There may even have to be some degree of cross-party consensus.
I am absolutely convinced that, if we look at how the welfare state will be managed in 10, 15 or 20 years' time, we will be looking at lifetime personal accounts, and people will have confidence that what they pay in for their old age or education will not be raided by the state, whether for tax cuts, for spending in other areas or to manage the economy.
That is a very attractive philosophy, which we have to start to grapple with. If we do not, we will always be caught between the constant desire, which Conservative Members naturally have, for tax cuts, realising at the same time that the bulk of spending is locked up in these great state bureaucracies: spending on health, education and welfare.
As part of that process, I see the Treasury not so much involved in a vast churning process of taking from one hand, whether in child benefit and so on, and giving with the other, as becoming much more of a Ministry of Finance, charged with balancing the books, with the welfare state devolved much more into charitable trusts, in which people have real confidence that their savings and investments are protected—not private companies trading for profit, but charitable trusts.
I see education organised in very much the same way, with the boundaries between state and private education blurring as the money effectively follows the pupil around to whatever school or college he or she attends. That is an attractive solution, which the Treasury should at least be considering. The Treasury would become much more of a Ministry of Finance.
At the same time, the annual Budget would not be so much an exercise in political management with the Chancellor constantly looking over his shoulder, as he has had to do this week, balancing tax cuts with managing the

currency because he wishes to bring in interest rate cuts which will be important in terms of the supply-side economy, economics and electoral popularity. He would be looking at the Budget much more from the point of view of a Minister of Finance, balancing the nation's books. The currency would be run by an independent Bank of England, backed by commodities, becoming a true inflation-proof hard currency.
I accept that those are radical reforms, which could take five, 10, 15 or 20 years to introduce. But we need the courage, vision and determination to debate such reforms. If such issues are discussed in terms of a fatuous party political debate across the Chamber, we will never meet the expectations of the British electorate.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. There are 30 minutes left before the winding-up speeches begin and three hon. Members hope to catch my eye. I hope they all will.

Ms Judith Church: I shall take your advice, Mr. Deputy Speaker.
We have heard a number of interesting speeches tonight, particularly from my right hon. Friends the Members for Kingston upon Hull, East (Mr. Prescott) and for Ashton-under-Lyne (Mr. Sheldon) and my hon. Friends the Members for Birmingham, Small Heath (Mr. Godsiff) and for Barrow and Furness (Mr. Hutton). When a matter has been addressed so well, I see no reason in the same debate to repeat points that have already been made.
I hope tonight to address the concerns of single parents in Britain, the vast majority of whom—nine out of 10—are women. More than that, I want to address the problems of their children who will be the real victims of the measures announced by the Chancellor in his Budget. Many of my constituents are single parents and they are the scapegoats of a Budget that has made the pathway from unemployment into work more difficult.
As we all know, single parenthood takes many forms—widowhood, the abandonment of women and their children, mothers bringing up their children when the father has failed to acknowledge his responsibility, women who have been separated or divorced who still maintain their children's contact with their father and women who are unable, for many reasons, to live with the father of their children.
Those parents all care for and love their children, but their lives are challenging and stressful. There are only so many hours in the day, but there are many domestic and caring tasks to undertake and complete. With the addition of paid employment, the burden becomes truly onerous. We all recognise that such a responsibility is better shared between two parents, but we must accept the reality that that is not possible for many people—a growing number in Britain.
I want to acknowledge the magnificent job which so many single parents do for their children. They deserve our praise and support and, more than that, financial recognition of the additional costs faced by lone parents in bringing up their children. Instead, all they get from the Chancellor in the Budget is a kick in the teeth. That in itself would be bad enough, but what is worse is that the Budget will hurt their children and it is the children


who are the most important people in our society. They deserve not just our affection and love but our protection and fair provision in the benefits system.
In his Budget statement, the Chancellor said that steps would be announced
to close the gap between single parents benefit and those paid to other families.
The hon. Member for Gainsborough and Horncastle (Mr. Leigh) gave the impression that it is the families with a married man who are the good families, the real families, and that single-parent families are less good. The Chancellor went on to say:
The right approach to single parents is neither to penalise them nor to favour them.
But he has actually shown a far right, extremist and uncaring approach to single parents which is far from what I consider to be the right approach.
I listened in disbelief as the Chancellor continued. He may have been too involved in delivering his speech to hear, but I actually said, "Not true", when he said:
The costs and responsibilities of having children are the same for couples as they are for single people."—[Official Report, 28 November 1995; Vol. 267, c. 1060.]
The reason why that is not true was given in the Chamber the following day by my hon. Friend the shadow Secretary of State for Social Security, my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith). He said that the Government had recognised the obvious truth that it is more costly for a single parent to bring up children than for a couple. He said:
The 1985 Green Paper on the reform of social security argued that one-parent benefit should be continued
'as a contribution to the additional costs' … 'faced by lone parents in bringing up children alone'.
It approved the introduction of a lone-parent premium in order to recognise
'the extra pressures faced by lone parents.'
In 1985, the Government recognised that extra pressures and extra costs were faced by lone parents; now it would appear that they do not."—[Official Report, 29 November 1995; Vol. 267, c. 1216.]
What has changed in the past 10 years to alter the Government's policy so dramatically?
The true additional costs of bringing up a child within a single-parent family are far too numerous to list now, but let me cover just a few. There are families with two economically active parents and families where only one parent is economically active and perhaps the wife stays at home to look after the children. In both those cases, the cost of child care is covered either by the additional income of the second earner or because the non-working mother cares for the children for free within the family unit.
The cost of child care is amazingly high. I am sure that Conservative Members will know that the cost of a nanny is well beyond what my constituents can afford. Even a registered child minder, recognised to be a good but cheaper form of child care, can cost £100 a week for 50 hours of care and another £60 or £70 for an additional child for the same number of hours. That is a tremendous amount of money. Conservative Members are out of touch if they do not recognise that a number of single parents who voted for them at the last general election are horrified at the steps being taken to freeze and reduce their benefits. After-school care of 15 hours a week for two children costs between £50 and £75 a week net.
In addition, there is the cost of babysitting. It is not a question of a single parent wanting to go out on the town at Ronnie Scott's or wherever it is that the Chancellor thinks single parents might want to go in the evening; it is a question of going to parents' evenings at a child's school—parental involvement in education, which the Government allege they want to encourage—or of going to self-improvement or evening classes so that a single mother can return to the work force or, if she is working, acquire additional qualifications so that she can progress up the ladder and provide a better standard of care for her children, which is what she is trying to do. It is clear that the additional costs are there. They were recognised 10 years ago, but suddenly in this Budget they have disappeared.
The effect of the Budget on children from lone-parent families will undoubtedly be quite dreadful. Account is not taken of children who are growing up in families without an income earner. Income support takes no account of birthday and Christmas presents, birthday parties, treats such as visits to the zoo and museums and other things that cost a good deal of money, as all of us who are parents recognise. The same applies to lone parents on low wages who receive family credit or who struggle to hold on to their jobs when their children are ill and they must stay at home.
A Budget such as this, which takes money away from lone parents, hurts children. It puts more pressure on people who, although they may be coping brilliantly now, are struggling to keep their heads above water. Conservative Members do not listen; they do not understand. They do not perceive the economic nonsense of the Government's proposals—for it is economic nonsense to block the pathway into work for those who want to work but cannot afford to, like my constituents, by freezing benefits.
This tired, discredited, failed Government are out of touch. They have run out of ideas, and the people know that they should be out of office.

Mr. Graham Riddick: My hon. Friend the Member for Tatton (Mr. Hamilton) made a comparison between the Leader of the Opposition, the right hon. Member for Sedgefield (Mr. Blair), and the Reverend Moon. I suggest a somewhat less dramatic comparison between the current Leader of the Opposition and Harold Wilson in 1963–64. Both were new, youngish leaders; there had been a long spell of Conservative Government; both apparently offered change. The right hon. Member for Sedgefield is hitching a ride on the Internet bandwagon, which carries echoes of the way in which the then Leader of the Opposition, Harold Wilson, claimed to embrace the white heat of the technological revolution.
In the event, the Labour party was just able to squeak into government. We must ensure that that does not happen this time. As one would expect, however, that Labour Government were booted out after six years. As we know, whenever the British people have had a dose of socialism they have booted out the Labour Government at the next available opportunity.
The time since the last general election in 1992 has been a tough one for Conservative Back Benchers and Conservative activists. Effectively, we have had to do


things in which we do not really believe. For instance, we were in the exchange rate mechanism, and we had fixed exchange rates. We Conservatives believe—or we certainly should believe—in floating exchange rates; we believe in a free market in exchange rates. We have also had to increase taxes, which was very unpopular not only with the country but with our supporters.
A comparison with the Labour party can be made in that context as well. Under the current Leader of the Opposition, Labour is also doing things in which I do not think Labour Members truly believe—but they keep quiet about all that, because they are happy to put up with whatever the right hon. Member for Sedgefield says in his quest for No. 10 Downing street. Things would, of course, be different if he were successful in that endeavour.
The experience of the past three years demonstrates just how difficult it is to control public spending. In the early 1990s, the Conservative Government took their eye off the ball, and allowed public spending to increase beyond a sustainable level. We therefore had no choice but to increase taxes in order to keep the public sector borrowing requirement at a reasonable level. Labour spokesmen make commitment after commitment, day in, day out. They are for ever criticising the Government for not spending enough money. As we know, a recent survey found that four out of 10 speeches made in the House by Labour Members called for more public expenditure. In fact, every Labour Government have increased the basic, or standard, rate of income tax, with one exception.
Before the last general election, my hon. Friend the Member for Dover (Mr. Shaw) tabled an interesting question. Looking back into history, he asked about the rates of tax that had applied under various Governments. It was revealed that all Labour Governments, with the exception of the first—they came to power in 1924, and remained in power for only nine months; they did not have time to increase taxes—had left office with a higher standard or basic rate of tax than had obtained when they came to power. Now the Labour party says that if it were in government it would introduce a windfall tax on the utilities, which would pay for—so far—11 spending commitments made by a number of Opposition spokesmen. Those spending commitments are on-going, but the windfall tax would be a one-off. I think that Labour would find it impossible to square the circle, and to reconcile the desire for higher public expenditure with its express wish to keep taxes down.
I do not deny that I should have liked taxes to be reduced further in last week's Budget. There is a strong moral case for tax cuts under a party that believes that people should be allowed to keep more of the money that they earn. I believe that there is a strong economic case as well: consumer confidence is low, and a stimulus in the form of tax cuts would have increased economic activity, which in turn would have generated increased revenue. Nevertheless, I welcome the fact that my right hon. and learned Friend the Chancellor—I am pleased to see him in his plaċe—was able to reduce taxes. The fact that he reduced them by £3 billion, as opposed to the £5 billion or so that I would have liked, leaves him with considerable room to reduce interest rates, and I hope that we shall see action on that front in the near future. Indeed, I believe that my right hon. and learned Friend will have

to act on that front if he wishes to meet the target of 3 per cent. growth that he has set for the economy next year.
When we say that we want taxes to come down, we are always asked where we would reduce public expenditure. That is a fair point. An aspect that causes me concern is the national lottery. I have never been a great supporter of the lottery: I saw it almost as state-sponsored gambling. I went along with it, however, on the ground that, in a single market, it was inevitable that other countries' lotteries would come into this country, and we—the British Exchequer—would lose out on considerable revenue. The national lottery has been an enormous success, generating some £4 billion to £5 billion turnover in its first year. Perhaps more tax should be raised from the lottery. At the moment the tax on the money raised is 12 per cent., but after the Budget pool betting duty will be 26.5 per cent.
Because of its effect on the economy as a whole—it is affecting economic patterns in a number of ways—perhaps we should treat the national lottery in the same way as we treat the pools companies. I suggest increasing the tax on the lottery to the same as that levied on the pools companies. I also suggest using lottery money rather more flexibly. Most of the money for good causes has to be pumped into capital projects, but much more of it could be used to meet the running costs of charities for example.
I welcome the Budget's help for the elderly. The 20 per cent. tax on income from savings will help millions of pensioners who, on average, have higher levels of savings. The fact that the Chancellor has been able to introduce that change with no opposition as far as I can see demonstrates how we have improved the debate about taxation generally and tax on savings in particular. In the old days, such income was known as unearned income and the last Labour Government penalised those who received such income with an additional 15 per cent. tax. The reduction of the tax to 20 per cent. for most savers is good news, especially for pensioners who rely so much on income from savings. I welcome the fact that the benefits system is to be more friendly towards elderly people who have long-term savings to pay for care in their old age.
I am delighted that education will receive substantially more in the next financial year than it received this year. That is right, but there is a problem in that the resources are channelled through local education authorities. I urge all LEAs to ensure that the extra money that we have made available goes to schools.
The Conservative party is the only one that believes in low taxes and whose philosophy demands that individuals should be allowed to keep more of the money that they earn. It is the only party that believes in private enterprise and free markets. Since 1979, we have made substantial supply-side changes to the British economy across a range of areas. The economy is now in good shape and it is important to maintain the approach that ensures low inflation, a consistent economic policy and competitive corporate taxation. We must also continue deregulation. The best form of deregulation is not to introduce new regulations in the first place.
Unemployment is falling, and that contrasts with the rest of Europe. The introduction of a national minimum wage and the adoption of the social chapter would be disastrous, especially for young people and for the long-term unemployed. The experience of countries such


as Spain and France, where youth unemployment is 40 and 25 per cent. respectively, must send a clear message to Opposition Members that a minimum wage and a social chapter would not be good news for the people that they profess to care for, those with few skills. Such people would suffer because of the minimum wage and I hope that the Opposition will drop the approach of increased regulation of the labour market.
This is the first Budget of a two-Budget strategy that will lead to an improvement in the Government's fortunes. We have to ensure that we avoid the disaster of a socialist Government in the general election of 1997. I commend the Chancellor on his Budget and look forward to next year's, which I am sure will deliver even more.

Mr. Michael Connarty: I shall start by declaring that my constituency party receives money from the Union of Communication Workers. I do not know whether I shall say anything in my speech to require that declaration, but I am so proud of the fact that I am sponsored by a trade union through my constituency party that I wish to put it on record.
I do not know whether the Chancellor, when he was out of the Chamber, took the trouble to go outside to feel the freezing wind which we are told is blowing from the Arctic. When he does that every day this winter I hope that it will remind him that when elderly people put on their gas or electricity, whether to cook or heat their homes, 8p in every pound that they pay will go to the Treasury. To that must be added standing charges. I have looked at the bills of some of my elderly constituents. Often up to 40 per cent. of the bill goes on VAT and standing charges. That is a terrible indictment of the philosophy behind the Chancellor's Budget last year and which continues this year. I heard someone say something about the Chancellor's language. I think that it was the language of bluff. It is the Chancellor's Budget, but it is really the Tory Government's strategy and their media "spin". The Chancellor said in presenting the Budget that a family on average earnings would be better off next year than this by around £450, around £9 a week, but it was not true. Such a family will not be better off in that way. It was strange that on the same day a Treasury press release on the Budget made the inaccuracy clear. It said:
Tax changes … will be worth … on average … over £2.80 a week".
The day after the Budget, the House of Commons Library issued a bulletin that said:
For a single earner couple with two children on average male earnings … of the total … £2.03 (reflects) the real change in income tax, NICs and child benefit.
Eventually, the Chancellor was forced to admit his own, I call it, exaggerated claim. In a letter on 30 November 1995 to the Leader of the Opposition, he said that
The Budget tax changes will leave such a family on average earnings £190 a year better off in cash terms.
I heard several Conservative Members say how disappointed they were about the position of the married man and about what has happened to the married couples allowance. After freezing the size of the married couples allowance five years running and reducing its rate from 25 per cent. to 15 per cent., the Budget increased the allowance by £70, which is in line with inflation. It is

now worth £269, just over half the £523 that it would have been worth if it had been uprated in line with inflation and were still available at 25 per cent.
The Budget increased taxes on petrol, up now, taxes on cars, up now, and taxes on cigarettes, up now. We heard the hon. Member for Banff and Buchan (Mr. Salmond) speak about the effect on rural communities. The National Farmers Union for Scotland has written to me and said:
In addition to freezing Hill Livestock Compensatory Allowances at this year's level, the increase in tax on vehicle fuel will bear heavily on the rural sector, and farming in particular. These increased costs will be reflected throughout the food producing chain on and off farm, and will have to be recovered from the market place"—
in other words, on prices.
The Deputy Prime Minister, who opened this debate, was responsible for the Department of Trade and Industry when he said on the Post Office external financing limit on 11 May 1995:
I am prepared to agree that in future we shall aim to set the EFL at about half the Post Office's forecast post-tax profit. I hope to make progress in that direction this autumn."—[Official Report, 11 May 1995; Vol. 259, c. 885.]
But what has happened? The external financing limit, which is basically a smash and grab raid on the Post Office's profits, will go to up to £298 million next year; in 1997– 98 it will go up to £317 million and in 1998–1999 it will go to £310 million. The Post Office's assessment says:
For every £1 we make, the Treasury is now demanding 66p.
That is not a 50–50 split. The assessment continues:
On top of that we have to pay Corporation Tax and together they leave nothing to invest in The Post Office.
So much for freeing up the Post Office as promised by the Deputy Prime Minister. As everyone knows, it is basically a smash and grab raid on the Post Office, an attempt to cripple it because the people would not let the Government privatise it.
On another part of the Government's strategy, the £400 million proposed cuts in social security, I want to give an example that is repeated again and again of what happens in the marginal rate. I shall call it the case of Mrs. Q, who was working and earning £19. Her husband is disabled, is unable to work and receives benefit and benefit for her. She got a job, which allowed her to earn £46. The family lost £30 and every allowance for the wife. When she went to inquire, she was told that the taper had been abolished. It was not a case of earning between £19 and £46, which one would think would be encouraged, and of her losing some benefit: they lost everything that was being gained by the husband for her.
In relation to incapacity benefit, before people would have had invalidity benefit. There is no doubt in the assessment that they are incapacitated—that has been agreed by medical officers. In April someone on invalidity benefit would have got a pension on top of benefit as an additional sum. Now that individual gets £8, whereas in April under the invalidity benefit he would have had £80. That is a massive cut in the standard of living. It was not someone who wanted to leave work and skive; it was someone who had worked hard all his life, found his health breaking down and needed some help from the state— yet he found himself £72 worse off than someone eligible for that allowance in April 1995.


I have been told that in the Falkirk area 7,000 invalidity benefit claims are being reprocessed for incapacity benefit. There are 14,000 people on income support, plus 1,400 receiving the severe disablement supplement. Every one of those people—more than 22,000—live in fear of the philosophy behind the Chancellor's Budget. The Government are cutting the welfare state to store money to give away, but people will not believe that the giveaway is worth anything.
There was a debate last night on the health service. I was impressed by Professor Baumol's analysis of health care when he spoke at the Office of Health Economics annual lecture 1995. His theory was basically that we can afford all the additional costs of health care, even though it is a personally delivered service, from which we cannot get great productivity without taking out staff. He said in his analysis that health care can be afforded only if the rest of the economy maintains its growth and productivity. We must have growth and we must have a productive economy.
In September, the CBI's report—I believe that it was sent to the Chancellor— said that the manufacturing order book for the UK is now lower than before September 1992. Manufacturing confidence is now lower than it was in September 1992. The Chancellor will recall that it was in September 1992 that Britain was kicked out of the exchange rate mechanism and there was a 16 per cent. forced devaluation of the currency. That has been squandered and we are back where we started—manufacturing order books are down.
I have looked at the figures for unemployment because the Chancellor has claimed that they are getting better. We must examine two counts. The first is the count done by the unemployment unit, based on the same standard that was used in 1979 under a Labour Government. On that count, there are 3,355,500 people—11.4 per cent.— unemployed, whereas the Government claim that the figure is 2,265,100—8.1 per cent. I want to put on record the definition of the unemployment unit count, because that is very important. It is, "The UU Broad LFS"—that is, the unemployment unit broad labour force survey—
is a provisional estimate of unemployed people who have not undertaken any work for pay or profit in the Survey reference week, who want work and are available to start work within two weeks.
In other words, it is the unused capacity in Britain's labour force. For Scotland, the count is 297,800—11.5 per cent., whereas the Government claim that the figure is 196,100—7.9 per cent.
Let us examine the Government's unemployment figures. For 1995, it is 8.1 per cent. of the population; for 1994 it was 9 per cent.; for 1993 it was 10.3 per cent; for 1992 it was 9.7 per cent., and so on. The point is that if we are not using that massive amount of productive capacity in our economy, we cannot generate the productivity and the growth that would allow us to do all the things that a Government who were running the economy properly could do.
I shall conclude. my speech now because I am conscious of the fact that there have been very long speeches. Although I have sat here all day yesterday and all day today, I am being squeezed in at the end of the debate. However, that is the way the place runs. I want to focus on the end of the Chancellor's figures. An important

speech was made by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). If we want to gauge the real state of our economy, we should look at our international trade balance, especially for each year from 1990 to 1994. In 1990, there was an £18 billion net negative figure. There was a £10 billion net negative figure in 1994. This year, the net negative figure so far is only £3 billion, but it will end up at a negative figure of £6 billion and the Chancellor has forecast that in 1996–97 it will reach a negative figure of £5 billion.
If, after a 16 per cent. devaluation, we cannot actually beat other countries, Britain will turn into something that the right hon. and learned Gentleman criticised, but which was commended by one of his Back Benchers—a country that makes its money by being a tax haven for other countries, laundering their money rather than selling them products. That is the problem with this Budget. It is simply fiddling about. I do not blame the Chancellor —he is a sweeper-up. The real economy is broken. The real economic policy of his Government has failed. The Budget is just fiddling about. The Chancellor is fiddling while the futures of my son and other children are going down the tubes. His Budget will do nothing to help them because it does not address the real problem—the economy of this country, not fiddling about with taxes on the margin.

Mr. Andrew Smith: This Budget fails the test of investment, fails the test of prudence and fails the test of fairness. That is why we shall vote tonight to give this House the chance to cut that most iniquitous of taxes, VAT on fuel, and why we could not accept the amendment to the law motion as it stands.

Mr. Fabricant: Will the hon. Gentleman give way?

Mr. Smith: In a moment.
We shall abstain on the tax changes in the Budget resolutions because although they do not include measures that we should have liked to see, we believe that people have suffered enough from the Government's broken promises and we do not intend to stand in the way of the small relief that the resolutions provide. In addition, we shall not only vote for the public expenditure amendment, moved by my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), but we shall vote against the Government's public expenditure programme because it is a product of wrong priorities and fails totally to provide the employment, investment and skill strategy needed for a fair society and a strong economy.
My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) spoke with characteristic wisdom of the importance of investment, which is now growing more slowly out of recession than at_ any comparable time this century. He referred to the need for capital allowances—something that we urged on the Government in our Budget submissions.
My hon. Friend the Member for Barrow and Furness (Mr. Hutton) deplored what he rightly called the "depressing short-termism" of a Budget that leaves the construction industry in slump and does so little for investment or fairness.


The right hon. Member for Guildford (Mr. Howell) raised the issue of the cuts to the British Council, as did a number of hon. Members on both sides of the House. I look forward to the Chancellor explicitly referring to that in his winding-up speech.
My hon. Friend the Member for Falkirk, East (Mr. Connarty) said that it was an unfair Budget and, of course, he was right. A fair Budget would not have made the poorest fifth of the population even poorer as a direct result of its measures. A fair Budget would not have rejected, as the Chancellor did, our proposals for a windfall levy on the excess profits of the privatised monopoly utilities. I do not see how the Government can possibly claim fairness for measures which make more from the poorest while doing nothing about the privatised utilities in which £100 million on share options remain to be cashed in and in the very week of the Budget Yorkshire Water increased its profit by 50 per cent.— not by supplying the people of Yorkshire with water, but by not supplying them with water.
On privatisation, that industry had a green dowry of £1.4 billion, with £6 billion of debt written off and £3 billion in investment credits set against tax. Yet since privatisation, executive pay has gone up by 339 per cent., profits have trebled, dividends have risen by 57 per cent., pollution incidents have gone up 53 per cent., investment has gone down by 20 per cent. over the past year and almost no mainstream corporation tax has been paid.
As my hon. Friend the Member for Ogmore (Mr. Powell) argued, a windfall levy on the excess profits of the privatised monopoly utilities applied to fund a welfare-to-work programme to help the young and long-term unemployed into real jobs with quality training would have been the cornerstone of any fair Budget. As for the Government's claims that their measures make people £9 a week better off, as my hon. Friends have said, we have exposed and will continue to expose the truth that, even on the Government's figures, only £2 of that can be set against the measures in the Budget, the rest is a Government assumption of earnings growth.
In his letter responding to my challenge on the matter, the Chancellor conceded that he cannot make his claims stand up as a direct effect of tax changes—only as speculation on growth and wages next year.
What becomes clearer by the day is that even that little bit the British people have been given back in the Budget will be taken away in other charges. Council tax, travel costs, rents, postal charges, water charges, prescription charges, dental charges, school meal charges and television licences will all go up. Everywhere they look, people will see that what is given with one hand is more than taken away with the other. As always, it is those on the lowest earnings, who are struggling to get off benefits and into work, who will be hit hardest by the increases. If the Government think that people will suddenly start to feel a lot better off as a result of the Budget, they are in for a shock.
Some of the measures in the Budget are welcome. The lower tax rate on savings income is a step towards the fairness on savings for which we have been calling. The increase in the thresholds for contributions to long-term care is welcome. The cut of 1p in the basic rate, the increase in personal allowances and the 20p band all provide a little welcome relief against the huge tax increases the Chancellor has imposed since the general

election, but they will still leave typical families £670 a year worse off. People are still paying the price for the Government's record of failure—broken promises year on year and not the tax cuts year on year that they were promised.
Conservative Members are fond of talking about their instinct on taxation. Yet they now repeat the pledge to end capital gains and inheritance tax. They choose to spend £4.6 billion to benefit the better off, half of it going to the 5,000 wealthiest families in the land, rather than to cut the starting rate of tax which would help the many and especially those moving from welfare to work. It only goes to show that when it comes to instincts, the Tory instinct is for unfairness.

Mr. Riddick: I very much welcome the fact that the hon. Gentleman welcomed the new 20 per cent. tax on savings, which he said was fairer. Why was it that at the general election the Labour party intended to impose a 9 per cent. surcharge tax on savings income?

Mr. Smith: The hon. Gentleman is in no position to lecture us on promises made at the general election. He should explain to his constituents why he promised tax cuts year on year and why they have had tax increases that mean that they are £670 a year worse off.
On the expenditure side of the Budget, we see the same sleight of hand at work. We find that the much-vaunted increase for education will depend on council tax increases and cuts in other council services, many of them essential services such as the fire service. Education will face difficulties this year, like the difficulties in Northumberland which have been reported to me. Extra funding, as the Chancellor has promised, does not always translate into improvements in front-line services because of the problems that the Government are causing those services. The extra funding for the police does not add up to the 5,000 extra officers the Home Secretary has promised. In the. health service, we see real cuts next year of 17 per cent. in public capital spending and a 6.5 per cent. cut, even including the hoped-for public finance initiative expenditure, with total capital spending from public and private sources together set to fall by II per cent. over the next three years. Again, more is taken with one hand than is given with the other.
We have to ask what sort of Government cut overseas aid by 6 per cent. after having wasted £234 million on the Pergau dam and what sort of Government cut the schools subsidy scheme even as they increase UK spending on the common agricultural policy by £100 million. How can it be right to freeze lone parent benefit which, as my hon. Friend the Member for Dagenham (Ms Church) said, will make it harder for single parents to get into jobs, even as the administrative costs of the Department of Social Security go up this year by £100 million? How can it be right to cut training by 4 per cent. even as the community action programme is dumped? My hon. Friend the Member for Birmingham, Small Heath (Mr. Godsiff) was right to stress the damage that those would create. It is no one-nation Budget which ends 40,000 opportunities for young people and in which the Chancellor axes the one programme designed to help young unemployed people with disabilities get into work. For those young people it is not a one-nation Britain but a no-hope Britain. I give way to the Chancellor on no-hope Britain.

Mr. Kenneth Clarke: The hon. Gentleman has given a long and passionate list of savings in public spending to


which he is opposed. His arithmetic is wrong and he has distorted several of them. Would it be fair of us to take some of what he said as a commitment that a Labour Government would reverse any of the spending savings? If so, would he like to say what is the cost of his commitment on any of those policy areas?

Mr. Smith: I will give the Chancellor some commitments. We would make cuts in the assisted places scheme. We would phase it out to put proper resources into cutting class sizes for five, six and seven-year-olds. We would cut the cost and the waste of rail privatisation and put that money into an integrated transport policy. We would cut the excess bureaucracy in the national health service and put the money into front-line patient care. We would cut the cost of nuclear privatisation. We would look carefully at that extra £100 million for social security running costs which the Chancellor has put in his Budget. Our public expenditure amendment spells out that and much more.
The welfare-to-work programme that we need to get especially the young and long-term unemployed into jobs with training would be funded by the windfall levy. The phased release of local authority capital receipts for social housing would cut bed and breakfast costs. We would boost front-line patient care and cut class sizes. Those are the choices which a fair Government would be making in a prudent Budget. Flow can the public believe the Government's claims of prudence when they see the neglect of public and private investment in the Budget? The climate of confidence for business to invest will not be created by a Budget which does nothing on capital allowances and nothing to encourage investment for the longer term, which increases VAT thresholds for small businesses by only half the rate of inflation and increases the business rate by 25 per cent. above the rate of inflation. No wonder the deputy director of the British chambers of commerce says:
Growth is not enough and will be unsustainable without investment … As a nation we are good at attracting investment from other countries but the question the Chancellor should be asking is why we are not investing in ourselves … If we are to become the enterprise centre of Europe, some redress of these spending priorities needs to take place.
The Government have taken one or two steps on the PFI that we have long called for. Training for civil servants who will negotiate the scheme will certainly be useful. The Government have failed to clarify the tendering process and the allocation of risk and to establish the new task force that is necessary to get things moving properly.
As for setting priorities for the PFI, we now have an A-list and a B-list of schemes. It is revealing that they are prioritised not according to their public benefit but according to commercial prospects. It is the privatisation not merely of provision but of the public interest in determining priorities for provision.
As the reaction of the construction industry shows, the whole history of the PFI has been one of reality falling far short of Government rhetoric. It is no wonder that, since the Budget, the chairman of the Confederation of British Industry of Scotland has said of the PFI plans that he is
deeply anxious … When the PF1 came out in 1993, it was additional to Government spending. In fact what we now have is replacement funding.

Of course, the reality is even worse. The Chancellor's own projections show a real cut of 17.8 per cent. in public capital spending, reduced only to a real cut of 8.4 per cent. when the private finance initiative wish list is included. According to the Red Book, we are faced with the certainty of a £3.9 billion cut in direct Government capital spending, offset only by the hope that the private sector will make up £2 billion of the difference.
Let us not forget either that PFI spending carries with it revenue consequences and contingent liabilities for the future which, as my hon. Friend the Member for Barrow and Furness pointed out in an excellent speech, will count against the public sector. I challenge the Chancellor in his reply to say how the public sector accounts will deal with that because not to account for the future consequences of present commitments is not prudent either.
The reality is that under the Government, public assets—the infrastructure of competitiveness and fairness—are being run down to pay the costs of economic and social failure. How can this be a prudent Budget when it not only increases public borrowing projections substantially but does so not for productive investment but to cover the shortfall on current Government spending.
It is bad enough for this year's PSBR to be £7.5 billion greater than forecast last year; for next year's to be £9.9 billion greater; and for the year after next's to be £10 billion bigger. However, for that to happen at the same time as public investment expenditure is being cut by £4 billion over the next three years is imprudence embedded as economic dogma.
In place of the golden rule that borrowing should be for investment across the cycle we now have Clarke's leaden rule: that investment must fall as far as necessary so that borrowing across the cycle can sustain a current deficit. It is the economics of remortgaging the house and forgoing repairs simply to pay the housekeeping bills.
I do not think that it has yet sunk in how serious the position is. If the Chancellor's projections turn out to be accurate—and they are based on what the right hon. Member for Fareham (Sir P. Lloyd) called an optimistic growth forecast—the Red Book shows that the Chancellor proposes to borrow between now and the end of decade twice as much as he said that he planned to borrow last year: an extra £39 billion Tory borrowing plan between now and the millennium.
To put it in perspective, even if the Chancellor's forecasts are accurate, Britain will, over the 1990s, have taken on an extra £200 billion of borrowing as compared with £ 31 billion in the 1980s. Central Government debt interest payments alone will add an extra £33 billion in interest payments on to the shoulders of the British people. [Interruption.] I got that figure from page 69 of the Chancellor's own Red Book statement. He ought to read it.
It is the old, old story of Conservatives borrowing for their Government before an election that which they would force the people to pay for afterwards. The truth is that the Government are prisoners of their economic failure. It is the same failure on investment, growth, training and unemployment that has plunged Britain down the world prosperity league from 13th to 18th place: 7p


up, 1 p down—taking with one hand more than they give with the other and borrowing, borrowing all the way. No—for a strong economy, a fair society, sound public finances and quality public services, Britain needs a new start with Labour, a strategy for productive investment and skills to unite a country so divided by the Conservatives and a welfare-to-work programme which will enlist the talents, skills and energies of all our people in common success.
When it comes down to it, it is all about unfairness with the Tories and fairness with Labour: unfair taxation with the Tories and fair taxation with Labour; an unfair Britain with the Tories and a fair Britain with Labour. That is why the House should vote to cut VAT on fuel and vote for a public expenditure programme to build a fair society and a strong economy.
For now, all that we have is a Government who have run out of ideas and who are getting by on borrowed money and living on borrowed time. With their credit with the British people exhausted, and the day of reckoning approaching, they know that the Budget cannot save them, and it will not.

The Chancellor of the Exchequer (Mr. Kenneth Clarke): The hon. Member for Oxford, East (Mr. Smith) called for a new start with Labour, but unfortunately he said that with 30 seconds to go in his speech, so he had no time to explain to us what that new start might mean in particular. We have had that type of speech every day throughout the Budget debate. The trouble is that the Labour party has introduced all the new American public image approaches to electioneering, and it has begun to reduce politics to the level of light entertainment.
The Labour party has given an illustration this evening, yet again, of an official Opposition party that has decided that, when faced with real problems, it will not oppose, it cannot oppose and it certainly will not propose anything to deal with them. I accept that the hon. Member for Oxford, East touched on those problems with some vigour, but he produced no pledges or polices. He certainly produced nothing—quite remarkably—that disagreed with any of the Budget propositions that I have brought before the House.
There is no Labour alternative, for which in some ways there is much thanks, but it is the vacuum that the Labour party represents that poses the greatest threat to the present strides that the British economy is making towards, I believe, being one of the strongest economies in western Europe.
The Opposition have retreated before a Budget that combined a reduction in taxation, balanced by a reduction in public spending, while still protecting increased spending on the key services of health, education and the police. The Budget has also kept borrowing firmly under control, so that, outside the House, I have a won a reputation for responsibility, honesty and sound finance. I am happy to be accused of all those things, which frankly no Labour Chancellor would ever be accused of in a thousand years.

Mr. Hugh Bayley: In his Budget speech, the Chancellor said that the Government would provide resources to appoint 5,000 extra police officers. The resources they have given to North Yorkshire will provide

just 30 extra police officers, leaving North Yorkshire police force still 70 below establishment, and eight police officers below the number in post under the last Labour Government, when the crime rate stood at 20,000 crimes a year. That crime rate is now more than 60,000 crimes a year, and in my county it is still rising. When will the Chancellor make good his pledges to provide the policing that people in North Yorkshire need to protect them and to catch the criminals?

Mr. Clarke: The increase of 5,000 officers is spread over a number of years. The hon. Gentleman is talking about the first year. [Interruption.] No, of course it is spread over a number of years, and was clearly expressed to be so. The money is there to provide for that increase in police manpower. The hon. Member for York (Mr. Bayley) delved back to the days before civilianisation. Now we have more policemen, we have more officers engaged in the targeting of crime, such as the successful operation about which we heard today. Additional real resources will go to the police service.
I must point out to the hon. Member for York what I have pointed out to other Labour Members frequently throughout the debate. There was not a word in the Opposition winding-up speech tonight, or a word from any the shadow Treasury Front-Bench. team about an undertaking to spend any more than we are undertaking to give in increased spending on the police services. That is true of all our tax provisions and spending plans.
On tax, we have achieved great progress towards the 20p basic rate. We have widened the lower rate limit, raised the threshold and cut the basic rate to 24p.

Mr. Robert Ainsworth: Will the right hon. and learned Gentleman give way?

Mr. Malcolm Bruce: Will the right hon. and learned Gentleman give way?

Mr. Clarke: I will do so in a second, but I cannot give way too much in my short winding-up speech. Let me make some progress.
The various reasons that have been given for not voting against the cut in basic rate make no sense at all. Labour Members use the litany that "the people have suffered too much". When that was given to them by the hon. Member for Hartlepool (Mr. Mandelson), they might have asked him to explain how it answers the question, "Do you think it is a good thing or a bad thing to reduce the rate to 24p?" After five days of debate, the Opposition Treasury team cannot make up their minds on that difficult question. They abstain.
We have reduced taxation for savers. The hon. Member for Oxford, East was clearly in favour of that. The cut in the small companies' corporation tax will greatly benefit many small businesses. I am not sure about the Labour party's abstention on that.
I heard the right hon. Member for Kingston upon Hull, East (Mr. Prescott) busily denying that there was any correlation between economic success and low rates of corporate taxation. He was worried about that, and anxious to demonstrate that there were successful countries that had higher rates of taxation. To what level does the Labour party intend to raise corporate taxation? The right hon. Member argued that raising corporate taxation does not affect economic success. I am rather


suspicious about Labour's abstention on that. We have also provided relief on the uniform business rate. The Labour party has no view on any of those tax proposals.
The Liberal party, however, does have a view. Liberal Members will agree that it is absolutely pathetic for the Labour Front Bench to have a so-called shadow Chancellor and a so-called shadow Chief Secretary to the Treasury who cannot even tell the hungry masses behind them what opinion they have on any tax proposal in the Budget.
The hon. Member for Gordon (Mr. Bruce) is in favour of a penny increase in income tax, which has become a vote against my penny. It was a penny increase at the last election. The Liberals have spending commitments of almost £5 billion. They keep spending the same penny over and over again. It is a Liberal party windfall tax.

Mr. Malcolm Bruce: The Chancellor knows that that is not true, and that our spending commitments were fully costed. He started by saying that he had a well earned reputation for sound finance, and he knows that I have given him credit for that. How can he explain to the House the fact that, last year, when forecast borrowing was £21 billion and growth was 4 per cent., the position was so serious that he had to increase taxes? This year, when borrowing is forecast at £22.5 billion and growth has slowed to 1.6 per cent. apparently there is room to cut taxes. Is that sound financial management?

Mr. Clarke: I agree that last year's forecasts have not proved correct in the outturn, not because we have lost control of public spending, but because the revenues from the taxation to which the Opposition appear to object have fallen short and because of a slowdown, particularly in our key overseas markets.
The Budget has reacted to that by keeping borrowing on a firm downward course towards balance in the medium term. It is absurd for the Liberals first to go in the opposite direction to the Labour party and say that they are a tax-increasing party, and then to claim to outdo me in achieving a balanced Budget in the medium term—which I am not sure is their objective. The Liberals are pretty free with their spending pledges, as they would spend a 1p increase in income tax several times over.
We have controlled public spending. The shadow Chief Secretary, the hon. Member for Oxford, East, complained about that. Some of my hon. Friends raised small objections. My right hon. Friend the Member for Guildford (Mr. Howell) mentioned the British Council. It is clear that we have to make some cuts in our overseas expenditure. My right hon. and learned Friend the Foreign Secretary has distributed public spending restraint between the diplomatic service, the British Council and the BBC overseas service. It is for him to judge the respective priority of those services and where the costs should properly fall, but one cannot exempt any area if one is to achieve public expenditure control.
It is that which has paved the way for the tax cuts that I have just described. The tax cuts were targeted in the way I described at areas that will help the country's performance, but they were financed by the public expenditure cuts to which the hon. Member for Oxford, East objected.
At one stage, the hon. Member for Dunfermline, East (Mr. Brown) described as "peanuts" my tax cuts of £3.5 million, which is one half of 1 per cent. of GDP—without jeopardising our fiscal aims. Over three Budgets, I have taken £53 billion out of public spending plans, and almost all those measures were opposed by the Labour party. We have done that in a way that allows an extra £878 million to be spent on schools. We will increase national health service spending by more than £1 billion next year.
It is no use Labour Members trying, as several did, to hold up as a cut a switch out of publicly procured capital spending to current spending on patient care, disregard the £650 million already built in on top for savings in bureaucracy in the health services, and disregard the funds that the private finance initiative—which Labour supports—will undoubtedly bring in.
The Budget has allowed for an extra 5,000 police officers and 10,000 closed circuit television cameras.
We are a reforming Government. Some people outside doubt our ability to deliver the tight spending plans that we have produced. They ignore the fact that, to achieve cuts, we have not gone in for a routine candle-ends public spending round. We now have a Cabinet Committee that examines priorities. That is how we can cut overall and still increase spending on health, schools and the police.
That obviously throws Opposition Members completely, because they do not understand how we do that. We are also moving to resource accounting and modernising the civil service. The modernisation of government and the introduction of measures such as the private finance initiative and contracting out—which Labour often opposes—make credible the delivery of essential public services costing less than 40 per cent. of GDP.

Mr. Robert Ainsworth: The Chancellor has tried to convince the public that his tax cuts are worth £9. What assumption did the right hon. and learned Gentleman make as to the level of earnings increases to arrive at that figure of £9?

Mr. Clarke: Last year and in many previous years, the Opposition asked a great number of questions about the effect on the average family of Budget assumptions and changes. That is a perfectly fair question, and the Treasury has a standard methodology. It involves making assumptions about the growth of earnings, inflation and the economy, and setting those against all taxes and charges.
We have done that again. That reflects reality. My Budget statement made clear the difference in tax. The Opposition are deliberately being stupid when they pretend that the figure of £9 per week was ever held up by anybody as a £9 per week reduction in taxation. It is the increase in spending power of the average family as a result of economic growth, the success of our policies, the low inflation that we have achieved, the growth in earnings that we expect and reductions in taxation. An Opposition who are silent about all the Budget measures are in no position to deride or gainsay them.

Mr. Andrew Smith: rose—

Mr. Clarke: Of course I will give way to the hon. Gentleman, but will he bounce to his feet and say what proposal he has that would affect that figure of £9? The


hon. Gentleman does not seem to deny in the slightest that the average family will expect to be £9 a week better off next year—£450 a year—as a result of the success of this Government's policies.

Mr. Smith: Will the Chancellor answer the question asked by my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth)? Of that £9, how much is earnings, and what assumption did the right hon. and learned Gentleman make about the rate of earnings increase? A figure will do.

Mr. Clarke: A whole set of assumptions are set out in the Red Book, as the hon. Gentleman perfectly well knows. One assumption is a 1¾ per cent. increase in earnings— which is not the same as pay settlements. That assumption is alongside a lot of other well-founded assumptions about inflation and growth based on the Budget, which add to the increased purchasing power of the average family.
Take-home pay, after tax and after inflation, will be about £450 higher next year. We have never tried to conceal any of this; if the Labour party would quote my Budget speech accurately, all of it would be perfectly clear.
I return to my theme, and make no apology for doing so. We have heard not a word from the Opposition that would affect this figure in the slightest: not a word on taxation, not a word on spending. No one on the Labour Front Bench has committed the Labour party to spending a penny more on the national health service than we propose. Indeed, when we suggested that the hon. Member for Bristol, South (Ms Primarolo), a Labour Treasury spokesman, had talked of increases in spending on the NHS only 12 months ago, the hon. Member for Dunfermline, East demanded that the Chief Secretary withdraw his heinous allegation.
Not a penny more for the police has been pledged by any Labour Front-Bench spokesman. Nor has a penny more for education been pledged—which is surprising, because this morning the party came up with some half-baked but expensive-looking proposals in this respect. I quote the general secretary of the National Association of Schoolmasters/Union of Women Teachers, who said this evening:
Labour's plans add up to a curious concoction of the good, the bad, the idealistic and the unrealistic. There is not a snowball's chance in hell of realising these plans without substantial additional expenditure".
The Labour party stands accused of not offering a penny piece in support of any of their proposals.

Mr. Salmond: rose—

Mr. Clarke: I am just coming to the hon. Gentleman's point about VAT on fuel.
The Labour party says that it will not vote against anything. Voting against the Budget simply means voting against the resolution changing the law—totally meaningless. The Budget is a combination of tax proposals and, nowadays, of spending proposals. The Opposition ain't going to vote for any particular tax or against any particular tax. They do not have a spending proposal—yet they are going to vote against the Budget. Meanwhile, they appear to be going to join the hon. Member for Banff and Buchan (Mr. Salmond) and his Scottish nationalist friends, although not actually in voting

for lower VAT on fuel. They are just sticking their noses out of the burrow, and they appear, just possibly, to be wavering towards a policy that might pave the way to reducing VAT —

Mr. Prescott: What about last year?

Mr. Clarke: I will tell the hon. Gentleman what happened last year. The idea was proposed by the hon. Member for Banff and Buchan last year. Then, the Labour party could not say how it would pay for the idea, which is no doubt why the Opposition retreated last year, in a faintly insulting fashion, from the very thing they are now going to vote for.
Let me repeat what the hon. Member for Edinburgh, Central (Mr. Darling) said then about the very matter which this evening constitutes the one vote of principle on which the Labour party says it will take a stand:
This nationalist amendment is another cynical ploy from an increasingly opportunist and desperate party. The nationalists know that the amendment has no chance of succeeding because there has been no campaign behind it … The nationalist amendment has been tabled for them to be able to play party politics with people's VAT bills. It is a cynical ploy from a party that sees its support slipping in the Scottish polls."—[Official Report, 23 January 1995; Vol.253, c.49.]
The hon. Member for Oxford, East tried to invent a reason to explain why the Labour party is standing on its head on this issue within the space of 10 months. Rather fatuously, he suggested that there was otherwise a risk of not getting the 8 per cent. through last year. But a few moments before in that debate, the Paymaster General had made it perfectly clear that there was no such risk. So Labour has ended up tonight supporting the Scottish nationalists in what Labour described but 10 months ago as a cynical ploy.

Mr. Salmond: Let us test the Chancellor's consistency. Does he remember, in his last Budget speech, and in other speeches, defending the imposition of VAT on domestic fuel on the grounds that there were increased resources for the home energy efficiency scheme? Now that he has cut that scheme by 30 per cent.—£30 million—200,000 fewer homes will be insulated. Would he care to revisit his arguments for VAT on domestic fuel?

Mr. Clarke: The home energy efficiency scheme is hugely successful, and I am second to none in my support of it. Expenditure on the scheme had reached a total of £100 million a year, and it has insulated many thousands of homes. It is a great breakthrough in energy efficiency, and it is also helping many people on lower incomes with their bills.
The reason why my right hon. Friend the Secretary of State for the Environment announced that he is cutting back from our peak of £100 million last year is that, as it stands, the scheme is open to people above retirement age, regardless of income. In principle, it is open for applications from people who happen to be fortunate enough to have retired with considerable resources of their own. It was never intended that the grant should be available to people of better-than-average incomes when they retire. Therefore, it will be more selectively offered to retired people.
I invite the hon. Gentleman to ask my right hon. Friend the Secretary of State for the Environment for the details that lie behind the change in estimates for that scheme.


I have not heard a member of the Labour party commit to having any view one way or the other on that, either. I have some sympathy on this occasion with the Scottish National party for pressing the matter, because only in Scotland does the Labour party have a taxation policy at all. In Scotland, everybody would have to pay 3p in the pound more. Income tax will be higher than it is south of the border. It is no good the hon. Member for Dunfermline, East looking uncomfortable. No policy has come forward. He tried one—a 10p rate. We have heard very little more about that rate. The £8 billion that it would cost has somehow never been explained.
The right hon. Member for Kingston upon Hull, East gives no other rates. Earlier, when I asked the deputy Leader of the Opposition why he would not give any other tax rates, and repeated the question that I asked the right hon. Member for Derby, South (Mrs. Beckett), who is also on the Front Bench—whether she could name a tax cut in this Budget that she is against, and whether she could give me a spending limit that she should raise—he could not answer that, either. He says that we have to wait.
If it is too difficult for the Opposition to read the Red Book, and if, in the mass of statistics, there is some nugget of information about the British economy that is holding them back from propounding the policies that they are so anxious to introduce, I would like to know what it is. But if there is something missing, why is it possible to give a 10p rate at the bottom and yet not say what rate they would put at the top? Why do they need to look at the books to say that lop will be the bottom rate, if they cannot say what rate they would contemplate for the higher-paid? We all know perfectly well that they are the only Front Benchers in history to have a split when they have no policy.
But the right hon. Gentleman want to puts up the tax on the higher-paid. I have known him for 25 years. His idea of the higher-paid is not very high at all in the opinion of many—[Interruption.] Many frustrating things appear to happen on the Opposition Benches. Perhaps we should have had the shadow Foreign Secretary come in and try to give us a policy, because somebody should.
When the right hon. Gentleman was asked a question by the Deputy Prime Minister, he, being an honest and candid man, for one moment paused and gave a rather endearing smile. I think that it was the smile that must have inspired the poetry that my right hon. Friend quoted, and of which Conservative Members are all so deeply envious. When the right hon. Gentleman gives that sweet smile, he is meant to use the words "New Labour". They have absolutely nothing else to say.
As I said when I began, there is a serious problem in all this. It is a problem for Opposition Members. They all went on and on about cuts in public spending—the hon. Member for Oxford, East quoted an absolute litany. He had a better reply when I asked him what the Labour party was promising to increase spending on. He did not give me an answer, but everybody cheered while he announced a list of cuts that either added up to nothing or were giving up a lot of privatisation proceeds, which will not do very much about the borrowing requirement, on which he claimed that he would do better than me. He has no answer. He did not promise a thing, and he is not going to vote against the tax cut.
Has the great Labour and trade union movement come to this? Well, it has. The Opposition are not new Labour, they are not one-nation Conservatives, they are not ex-socialists; they are nothing on policy. Handing over to them a great economic recovery would take us back to recession in a very short time indeed.

Question put, That the amendment be made:—

The House divided: Ayes 290, Noes 307.

Division No. 6]
[10.00 pm


AYES


Abbott, Ms Diane
Cox, Tom


Ainger, Nick
Cunliffe, Lawrence


Ainsworth, Robert (Cov'try NE)
Cunningham, Jim (Covy SE)


Allen, Graham
Cunningham, Rt Hon Dr John


Alton, David
Cunningham, Roseanna


Anderson, Ms Janet (Ros'dale)
Dalyell, Tarn


Armstrong, Hilary
Darling, Alistair


Ashdown, Fit Hon Paddy
Davies, Bryan (Oldham C'tral)


Ashton, Joe
Davies, Chris (L'Boro & S'worth)


Austin-Walker, John
Davies, Rt Hon Denzil (Llanelli)


Banks, Tony (Newham NW)
Davies, Ron (Caerphilly)


Barnes, Harry
Denham, John


Barron, Kevin
Dewar, Donald


Battle, John
Dixon, Don


Bayley, Hugh
Dobson, Frank


Beckett, Rt Hon Margaret
Donohoe, Brian H


Beggs, Roy
Dowd, Jim


Beith, Rt Hon A J
Dunwoody, Mrs Gwyneth


Bell, Stuart
Eagle, Ms Angela


Benn, Rt Hon Tony
Eastham, Ken


Bennett, Andrew F
Etherington, Bill


Benton, Joe
Evans, John (St Helens N)


Bermingham, Gerald
Ewing, Mrs Margaret


Berry, Roger
Fatchett, Derek


Betts, Clive
Faulds, Andrew


Blair, Rt Hon Tony
Field, Frank (Birkenhead)


Blunkett, David
Fisher, Mark


Boateng, Paul
Flynn, Paul


Bradley, Keith
Forsythe, Clifford (S Antrim)


Bray, Dr Jeremy
Foster, Rt Hon Derek


Brown, Gordon (Dunfermline E)
Foster, Don (Bath)


Brown, N (N'c'tle upon Tyne E)
Foulkes, George


Bruce, Malcolm (Gordon)
Fyfe, Maria


Burden, Richard
Galbraith, Sam


Byers, Stephen
Galloway, George


Caborn, Richard
Gapes, Mike


Callaghan, Jim
Garrett, John


Campbell, Mrs Anne (C'bridge)
George, Bruce


Campbell, Menzies (Fife NE)
Gerrard, Neil


Campbell, Ronnie (Blyth V)
Gilbert, Rt Hon Dr John


Campbell-Savours, D N
Godman, Dr Norman A


Canavan, Dennis
Godsiff, Roger


Cann, Jamie
Golding, Mrs Llin


Cattle, Alexander (Montgomery)
Gordon, Mildred


Chidgey, David
Graham, Thomas


Chisholm, Malcolm
Grant, Bernie (Tottenham)


Church, Judith
Griffiths, Nigel (Edinburgh S)


Clapham, Michael
Griffiths, Win (Bridgend)


Cark, Dr David (South Shields)
Grocott, Bruce


Clarke, Eric (Midlothian)
Gunnell, John


Clarke, Tom (Monklands W)
Hain, Peter


Clelland, David
Hall, Mike


Clwyd, Mrs Ann
Hanson, David


Coffey, Ann
Hardy, Peter


Cohen, Harry
Harman, Ms Harriet


Connarty, Michael
Harvey, Nick


Cook, Frank (Stockton N)
Hattersley, Rt Hon Roy


Cook, Robin (Livingston)
Henderson, Doug


Corbett, Robin
Heppell, John


Corbyn, Jeremy
Hill, Keith (Streatham)


Corston, Jean
Hinchliffe, David


Cousins, Jim
Hodge, Margaret






Hoey, Kate
Morris, Rt Hon John (Aberavon)


Hogg, Norman (Cumbernauld)
Mowlam, Marjorie


Home Robertson, John
Mudie, George


Hood, Jimmy
Mullin, Chris


Hoon, Geoffrey
Murphy, Paul


Howarth, Alan (Strat'rd-on-A)
Oakes, Rt Hon Gordon


Howarth, George (Knowsley North)
O'Brien, Mike (N W'kshire)


Howells, Dr Kim (Pontypridd)
O'Brien, William (Normanton)


Hoyle, Doug
O'Hara, Edward


Hughes, Kevin (Doncaster N)
Olner, Bill


Hughes, Robert (Aberdeen N)
O'Neill, Martin


Hughes, Roy (Newport E)
Paisley, The Reverend Ian


Hughes, Simon (Southwark)
Parry, Robert


Hutton, John
Pearson, Ian


Illsley, Eric
Pendry, Tom


Ingram, Adam
Pickthall, Colin


Jackson, Glenda (H'stead)
Pike, Peter L


Jackson, Helen (Shef'ld, H)
Pope, Greg


Jamieson, David
Powell, Ray (Ogmore)


Janner, Greville
Prentice, Bridget (Lew'm E)


Jones, Barry (Alyn and D'side)
Prentice, Gordon (Pendle)


Jones, Ieuan Wyn (Ynys Môn)
Prescott, Rt Hon John


Jones, Lynne (B'ham S 0)
Primarolo, Dawn


Jones, Martyn (Clwyd, SW)
Purchase, Ken


Jones, Nigel (Cheltenham)
Quin, Ms Joyce


Jowell, Tessa
Radice, Giles


Kaufman, Rt Hon Gerald
Randall, Stuart


Keen, Alan
Raynsford, Nick


Kennedy, Charles (Ross,C&S)
Reid, Dr John


Kennedy, Jane (L'pool Br'edg'n)
Rendel, David


Khabra, Piara S
Robertson, George (Hamilton)


Kilfoyle, Peter
Robinson, Geoffrey (Co'try NW)


Kirkwood, Archy
Robinson, Peter (Belfast E)


Lestor, Joan (Eccles)
Roche, Mrs Barbara


Lewis, Terry
Rogers, Allan


Liddell, Mrs Helen
Rooker, Jeff


Litherland, Robert
Rooney, Terry


Livingstone, Ken
Ross, Ernie (Dundee W)


Lloyd, Tony (Stretford)
Ross, William (E Londonderry)


Lloyd, Elfyn
Rowlands, Ted


Loyden, Eddie
Ruddock, Joan


Lynne, Ms Liz
Salmond, Alex


McAllion, John
Sedgemore, Brian


McAvoy, Thomas
Sheerman, Barry


McCartney, Robert
Sheldon, Rt Hon Robert


McCrea, The Reverend William
Shore, Rt Hon Peter


Macdonald, Calum
Short, Clare


McFall, John
Simpson, Alan


Mackinlay, Andrew
Skinner, Dennis


McLeish, Henry
Smith, Andrew (Oxford E)


Maclennan, Robert
Smith, Chris (Isl'ton S & Fsbury)


McNamara, Kevin
Smith, Liew (Blaenau Gwent)


MacShane, Denis
Smyth, The Reverend Martin


McWilliam, John
Snape, Peter


Madden, Max
Soley, Clive


Maddock, Diana
Spearing, Nigel


Mahon, Alice
Speller, John


Mendelson, Peter
Squire, Rachel (Dunfermline W)


Marek, Dr John
Steel, Rt Hon Sir David


Marshall, David (Shettleston)
Steinberg, Gerry


Martlew, Eric
Stevenson, George


Maxton, John
Stott, Roger


Meacher, Michael
Strang, Dr. Gavin


Meale, Alan
Straw, Jack


Michael, Alun
Sutcliffe, Gerry


Michie, Bill (Sheffield Heeley)
Taylor, Mrs Ann (Dewsbury)


Michie, Mrs Ray (Argyll & Bute)
Taylor, Matthew (Truro)


Milburn, Alan
Thompson, Jack (Wansbeck)


Miller, Andrew
Timms, Stephen


Mitchell, Austin
Tipping, Paddy


Molyneaux, Rt Hon James
Touhig, Don


Moonie, Dr Lewis
Trimble, David


Morgan, Rhodri
Turner, Dennis


Morley, Elliot
Tyler, Paul


Morris, Rt Hon Alfred (Wy'nshawe)
Vaz, Keith


Morris, Estelle (B'ham Yardley)
Walker, Rt Hon Sir Harold





Wallace, James
Wise, Audrey


Walley, Joan
Worthington, Tony


Wardell, Gareth (Gower)
Wray, Jimmy


Wareing, Robert N
Wright, Dr Tony


Wicks, Malcolm
Young, David (Bolton SE)


Wigley, Dafydd



Williams, Alan W (Carmarthen)
Tellers for the Ayes:


Wilson, Brian
Mr. Jon Owen Jones and


Winnick, David
Mr. John Cummings.




NOES


Ainsworth, Peter (East Surrey)
Curry, David (Skipton & Ripon)


Aitken, Rt Hon Jonathan
Davies, Quentin (Stamford)


Alison, Rt Hon Michael (Selby)
Davis, David (Boothferry)


Allason, Rupert (Torbay)
Day, Stephen


Amess, David
Deva, Nirj Joseph


Ancram, Michael
Devlin, Tim


Arnold, Jacques (Gravesham)
Dicks, Terry


Arnold, Sir Thomas (Hazel Grv)
Dorrell, Rt Hon Stephen


Ashby, David
Douglas-Hamilton, Lord James


Atkins, Rt Hon Robert
Dover, Den


Atkinson, David (Bour'mouth E)
Duncan, Alan


Atkinson, Peter (Hexham)
Duncan-Smith, Iain


Baker, Rt Hon Kenneth (Mole V)
Dunn, Bob


Baker, Nicholas (North Dorset)
Durant, Sir Anthony


Baldry, Tony
Dykes, Hugh


Banks, Matthew (Southport)
Eggar, Rt Hon Tim


Banks, Robert (Harrogate)
Elletson, Harold


Bates, Michael
Emery, Rt Hon Sir Peter


Batiste, Spencer
Evans, David (Welwyn Hatfield)


Bellingham, Henry
Evans, Jonathan (Brecon)


Bendall, Vivian
Evans, Nigel (Ribble Valley)


Beresford, Sir Paul
Evennett, David


Bitten, Rt Hon John
Faber, David


Body, Sir Richard
Fabricant, Michael


Bonsor, Sir Nicholas
Field, Barry (Isle of Wight)


Booth, Hartley
Fishburn, Dudley


Boswell, Tim
Forman, Nigel


Bottomley, Rt Hon Virginia
Forsyth, Rt Hon Michael (Stirling)


Bowden, Sir Andrew
Forth, Eric


Bowls, John
Fowler, Rt Hon Sir Norman


Boyson, Rt Hon Sir Rhodes
Fox, Dr Liam (Woodspring)


Brandreth, Gytes
Fox, Sir Marcus (Shipley)



Brazier, Julian
Freeman, Rt Hon Roger


Bright, Sir Graham
French, Douglas


Brooke, Rt Hon Peter
Gale, Roger


Brown, M (Brigg & Cl'thorpes)
Gallie, Phil


Browning, Mrs Angela
Garnier, Edward


Bruce, Ian (Dorset)
Gill, Christopher


Budgen, Nicholas
Gillen, Cheryl


Burns, Simon
Goodlad, Rt Hon Alastair


Burt, Alistair
Goodson-Wickes, Dr Charles


Butcher, John
Gorman, Mrs Teresa


Butler, Peter
Gorst, Sir John


Carlisle, John (Luton North)
Grant, Sir A (SW Cambs)


Carlisle, Sir Kenneth (Lincoln)
Greenway, Harry (Ealing N)


Carrington, Matthew
Greenway, John (Ryedale)


Carttiss, Michael
Griffiths, Peter (Portsmouth, N)


Cash, William
Grylls, Sir Michael


Channon, Rt Hon Paul
Hague, Rt Hon William


Chapman, Sir Sydney
Hamilton, Sir Archibald


Churchill, Mr
Hamilton, Neil (Talton)


Clappison, James
Hampson, Dr Keith


Clark, Dr Michael (Rochford)
Hanley, Rt Hon Jeremy


Clarke, Rt Hon Kenneth (Ru'clif)
Hannam, Sir John


Clifton-Brown, Geoffrey
Hargreaves, Andrew


Coe, Sebastian
Harris, David


Colvin, Michael
Haselhurst, Sir Alan


Congdon, David
Hawkins, Nick


Coombs, Anthony (Wyre For'st)
Hawksley, Warren


Coombs, Simon (Swindon)
Hayes, Jerry


Cope, Rt Hon Sir John
Heald, Oliver


Cormack, Sir Patrick
Heath, Rt Hon Sir Edward


Couchman, James
Heathcoat-Amory, David


Cran, James
Hendry, Charles


Currie, Mrs Edwina (S D'by'ire)
Heseltine, Rt Hon Michael






Hicks, Robert
Neubert, Sir Michael


Higgins, Rt Hon Sir Terence
Newton, Rt Hon Tony


Hill, James (Southampton Test)
Nicholls, Patrick


Hogg, Rt Hon Douglas (G'tham)
Nicholson, David (Taunton)


Horam, John
Nicholson, Emma (Devon West)


Hordern, Rt Hon Sir Peter
Norris, Steve


Howard, Rt Hon Michael
Onslow, Rt Hon Sir Cranley


Howell, Rt Hon David (G'dford)
Oppenheim, Phillip


Howell, Sir Ralph (N Norfolk)
Ottaway, Richard


Hughes, Robert G (Harrow W)
Page, Richard


Hunt, Rt Hon David (Wirral W)
Paice, James


Hunt, Sir John (Ravensbourne)
Patnick, Sir Irvine


Hunter, Andrew
Patten, Rt Hon John


Hurd, Rt Hon Douglas
Pattie, Rt Hon Sir Geoffrey


Jack, Michael
Pawsey, James


Jackson, Robert (Wantage)
Peacock, Mrs Elizabeth


Jenkin, Bernard
Pickles, Eric


Jessel, Toby
Porter, Barry (Wirral S)


Johnson Smith, Sir Geoffrey
Porter, David (Waveney)


Jones, Gwilyn (Cardiff N)
Rathbone, Tim


Jones, Robert B (W Hertfdshr)
Redwood, Rt Hon John


Jopling, Rt Hon Michael
Richards, Rod


Kellett-Bowman, Dame Elaine
Riddick, Graham


Key, Robert
Rifkind, Rt Hon Malcolm


King, Rt Hon Tom
Robathan, Andrew


Kirkhope, Timothy
Roberts, Rt Hon Sir Wyn


Knapman, Roger
Robertson, Raymond (Ab'd'n S)


Knight, Mrs Angela (Erewash)
Robinson, Mark (Somerton)


Knight, Rt Hon Greg (Derby N)
Roe, Mrs Marion (Broxbourne)


Knight, Dame Jill (Bir'm E'st'n)
Rowe, Andrew (Mid Kent)


Knox, Sir David
Rumbold, Rt Hon Dame Angela


Kynoch, George (Kincardine)
Ryder, Rt Hon Richard


Lait, Mrs Jacqui
Sackville, Tom


Lamont, Rt Hon Norman
Sainsbury, Rt Hon Sir Timothy


Lang, Rt Hon Ian
Scott, Rt Hon Sir Nicholas


Lawrence, Sir Ivan
Shaw, David (Dover)


Legg, Barry
Shaw, Sir Giles (Pudsey)


Leigh, Edward
Shephard, Rt Hon Gillian


Lennox-Boyd, Sir Mark
Shepherd, Colin (Hereford)


Lester, Jim (Broxtowe)
Shersby, Sir Michael


Lidington, David
Sims, Roger


Lightbown, Sir David
Skeet, Sir Trevor


Lilley, Rt Hon Peter
Smith, Tim (Beaconsfield)


Lloyd, Rt Hon Sir Peter (Fareham)
Soames, Nicholas


Lord, Michael
Speed, Sir Keith


Luff, Peter
Spencer, Sir Derek


Lyell, Rt Hon Sir Nicholas
Spicer, Sir James (W Dorset)


MacGregor, Rt Hon John
Spicer, Michael (S Worcs)


MacKay, Andrew
Spink, Dr Robert


Maclean, Rt Hon David
Spring, Richard


McLoughlin, Patrick
Sproat, Iain


McNair-Wilson, Sir Patrick
Squire, Robin (Hornchurch)


Madel, Sir David
Stanley, Rt Hon Sir John


Maitland, Lady Olga
Steen, Anthony


Major, Rt Hon John
Stephen, Michael


Malone, Gerald
Stem, Michael


Mans, Keith
Stewart, Allan


Marland, Paul
Streeter, Gary


Marlow, Tony
Sumberg, David


Marshall, John (Hendon S)
Sweeney, Walter


Marshall, Sir Michael (Arundel)
Sykes, John


Martin, David (Portsmouth S)
Tapsell, Sir Peter


Mates, Michael
Taylor, Ian (Esher)


Mawhinney, Rt Hon Dr Brian
Taylor, Rt Hon John D (Strgfd)


Mayhew, Rt Hon Sir Patrick
Taylor, John M (Solihull)


Mellor, Rt Hon David
Taylor, Sir Teddy (Southend, E)


Merchant, Piers
Temple-Morris, Peter


Mills, Iain
Thomason, Roy


Mitchell, Andrew (Gedling)
Thompson, Sir Donald (C'er V)


Mitchell, Sir David (NW[...]Hants)
Thompson, Patrick (Norwich N)


Moate, Sir Roger
Thornton, Sir Malcolm


Monro, Rt Hon Sir Hector
Thurnham, Peter


Montgomery, Sir Fergus
Townend, John (Bridlington)


Moss, Malcolm
Townsend, Cyril D (Bexl'yh'th)


Needham, Rt Hon Richard
Tracey, Richard


Nelson, Anthony
Trend, Michael





Trotter, Neville
Whittingdale, John


Twinn, Dr Ian
Widdecombe, Ann


Vaughan, Sir Gerard
Wiggin, Sir Jerry


Viggers, Peter
Wilkinson, John


Waldegrave, Rt Hon William
Willetts, David


Walden, George
Wilshire, David


Walker, Bill (N Tayside)
Winterton, Mrs Ann (Congleton)


Waller, Gary
Wolfson, Mark


Ward, John
Yeo, Tim


Waterson, Nigel
Young, Rt Hon Sir George


Watts, John



Wells, Bowen
Tellers for the Noes:


Wheeler, Rt Hon Sir John
Mr. Timothy Wood and


Whitney, Ray
Mr. Derek Conway.

Question accordingly negatived.

Main Question Put:—

The House divided: Ayes 315, Noes 285.

Division No. 7]
[10.16 pm


AYES


Ainsworth, Peter (East Surrey)
Clappison, James


Aitken, Rt Hon Jonathan
Clark, Dr Michael (Rochford)


Alison, Rt Hon Michael (Selby)
Clarke, Rt Hon Kenneth (Ru'clif)


Allason, Rupert (Torbay)
Clifton-Brown, Geoffrey


Amess, David
Coe, Sebastian


Ancram, Michael
Colvin, Michael


Arnold, Jacques (Gravesham)
Congdon, David


Arnold, Sir Thomas (Hazel Grv)
Coombs, Anthony (Wyre For'st)


Ashby, David
Coombs, Simon (Swindon)


Atkins, Rt Hon Robert
Cope, Rt Hon Sir John


Atkinson, David (Bour'mouth E)
Cormack, Sir Patrick


Atkinson, Peter (Hexham)
Couchman, James


Baker, Rt Hon Kenneth (Mole V)
Cran, James


Baker, Nicholas (North Dorset)
Currie, Mrs Edwina (S D'byire)


Baldry, Tony
Curry, David (Skipton & Ripon)


Banks, Matthew (Southport)
Davies, Quentin (Stamford)


Banks, Robert (Harrogate)
Davis, David (Boothferry)


Bates, Michael
Day, Stephen


Batiste, Spencer
Deva, Nirj Joseph


Beggs, Roy
Delvin, Tim


Bellingham, Henry
Dicks, Terry


Bendall, Vivian
Dorrell, Rt Hon Stephen


Beresford, Sir Paul
Douglas-Hamilton, Lord James


Biffen, Rt Hon John
Dover, Den


Body, Sir Richard
Duncan, Alan


Bonsor, Sir Nicholas
Duncan Smith, Iain


Booth, Hartley
Dunn, Bob


Boswell, Tim
Durant, Sir Anthony


Bottomley, Rt Hon Virginia
Dykes, Hugh


Bowden, Sir Andrew
Eggar, Rt Hon Tim


Bowis, John
Elletson, Harold


Boyson, Rt Hon Sir Rhodes
Emery, Rt Hon Sir Peter


Brandreth, Gyles
Evans, David (Welwyn Hatfield)


Brazier, Julian
Evans, Jonathan (Brecon)


Bright, Sir Graham
Evans, Nigel (Ribble Valley)


Brooke, Rt Hon Peter
Evennett, David


Brown, M (Brigg & Cl'thorpes)
Faber, David


Browning, Mrs Angela
Fabricant, Michael


Bruce, Ian (Dorset)
Field, Barry (Isle of Wight)


Budgen, Nicholas
Fishburn, Dudley


Burns, Simon
Forman, Nigel


Burt, Alistair
Forsyth, Rt Hon Michael (Stirling)


Butcher, John
Forsythe, Clifford (S Antrim)


Butler, Peter
Forth, Eric


Carlisle, John (Luton North)
Fowler, Rt Hon Sir Norman


Carlisle, Sir Kenneth (Lincoln)
Fox, Dr Liam (Woodspring)


Carrington, Matthew
Fox, Sir Marcus (Shipley)


Carttiss, Michael
Freeman, Rt Hon Roger


Cash, William
French, Douglas


Channon, Rt Hon Paul
Gale, Roger


Chapman, Sir Sydney
Gallie, Phil


Churchill, Mr
Garnier, Edward






Gill, Christopher
MacKay, Andrew


Gillan, Cheryl
Maclean, Rt Hon David


Goodlad, Rt Hon Alastair
McLoughlin, Patrick


Goodson-Wickes, Dr Charles
McNair-Wilson, Sir Patrick


Gorman, Mrs Teresa
Madel, Sir David


Gorst, Sir John
Maitland, Lady Olga


Grant, Sir A (SW Cambs)
Major, Rt Hon John


Greenway, Harry (Ealing N)
Malone, Gerald


Greenway, John (Ryedale)
Mans, Keith


Griffiths, Peter (Portsmouth, N)
Marland, Paul


Grylls, Sir Michael
Marlow, Tony


Hague, Rt Hon William
Marshall, John (Hendon S)


Hamilton, Rt Hon Sir Archibald
Marshall, Sir Michael (Arundel)


Hamilton, Neil (Tatton)
Martin, David (Portsmouth S)


Hampson, Dr Keith
Mates, Michael


Hanley, Rt Hon Jeremy
Mawhinney, Rt Hon Dr Brian


Hannam, Sir John
Mayhew, Rt Hon Sir Patrick


Hargreaves, Andrew
Mellor, Rt Hon David


Harris, David
Merchant, Piers


Haselhurst, Sir Alan
Mills, Iain


Hawkins, Nick
Mitchell, Andrew (Gedling)


Hawksley, Warren
Mitchell, Sir David (NW Hants)


Hayes, Jerry
Moate, Sir Roger


Heald, Oliver
Molyneaux, Rt Hon James


Heath, Rt Hon Sir Edward
Monro, Rt Hon Sir Hector


Heathcoat-Amory, David
Montgomery, Sir Fergus


Hendry, Charles
Moss, Malcolm


Heseltine, Rt Hon Michael
Needham, Rt Hon Richard


Hicks, Robert
Nelson, Anthony


Higgins, Rt Hon Sir Terence
Neubert, Sir Michael


Hill, James (Southampton Test)
Newton, Rt Hon Tony


Hogg, Rt Hon Douglas (G'tham)
Nicholls, Patrick


Horam, John
Nicholson, David (Taunton)


Hordern, Rt Hon Sir Peter
Nicholson, Emma (Devon West)


Howard, Rt Hon Michael
Norris, Steve


Howell, Rt Hon David (G'dford)
Onslow, Rt Hon Sir Cranley


Howell, Sir Ralph (N Norfolk)
Oppenheim, Phillip


Hughes, Robert G (Harrow W)
Ottaway, Richard


Hunt, Rt Hon David (Wirral W)
Page, Richard


Hunt, Sir John (Ravensbourne)
Paice, James


Hunter, Andrew
Patnick, Sir Irvine


Hurd, Rt Hon Douglas
Patten, Rt Hon John


Jack, Michael
Pattie, Rt Hon Sir Geoffrey


Jackson, Robert (Wantage)
Pawsey, James


Jenkin, Bernard
Peacock, Mrs Elizabeth


Jessel, Toby
Pickles, Eric


Johnson Smith, Sir Geoffrey
Porter, Barry (Wirral S)


Jones, Gwilym (Cardiff N)
Porter, David (Waveney)


Jones, Robert B (W Hertfdshr)
Powell, William (Corby)


Jopling, Rt Hon Michael
Rathbone, Tim


Kellett-Bowman, Dame Elaine
Redwood, Rt Hon John


Key, Robert
Richards, Rod


King, Rt Hon Tom
Riddick, Graham


Kirkhope, Timothy
Rifkind, Rt Hon Malcolm


Knapman, Roger
Robathan, Andrew


Knight, Mrs Angela (Erewash)
Roberts, Rt Hon Sir Wyn


Knight, Rt Hon Greg (Derby N)
Robertson, Raymond (Ab'd'n S)


Knight, Dame Jill (Bir'm E'st'n)
Robinson, Mark (Somerton)


Knox, Sir David
Roe, Mrs Marion (Broxbourne)


Kynoch, George (Kincardine)
Ross, William (E Londonderry)


Lait, Mrs Jacqui
Rowe, Andrew (Mid Kent)


Lamont, Rt Hon Norman
Rumbold, Rt Hon Dame Angela


Lang, Rt Hon Ian
Ryder, Rt Hon Richard


Lawrence, Sir Ivan
Sackville, Tom


Legg, Barry
Sainsbury, Rt Hon Sir Timothy


Leigh, Edward
Scott, Rt Hon Sir Nicholas


Lennox-Boyd, Sir Mark
Shaw, David (Dover)


Lester, Jim (Broxtowe)
Shaw, Sir Giles (Pudsey)


Lidington, David
Shephard, Rt Hon Gillian


Lightbown, Sir David
Shepherd, Colin (Hereford)


Lilley, Rt Hon Peter
Shepherd, Richard (Aldridge)


Lloyd, Rt Hon Sir Peter (Fareham)
Shersby, Sir Michael


Lord, Michael
Sims, Roger


Luff, Peter
Skeet, Sir Trevor


Lyell, Rt Hon Sir Nicholas
Smith, Tim (Beaconsfield)


MacGregor, RI Hon John
Smyth, The Rev Martin





Soames, Nicholas
Tracey, Richard


Speed, Sir Keith
Trend, Michael


Spencer, Sir Derek
Trimble, David


Spicer, Sir James (W Dorset)
Trotter, Neville


Spicer, Michael (S Worcs)
Twinn, Dr Ian


Spink, Dr Robert
Vaughan, Sir Gerard


Spring, Richard
Viggers, Peter


Sproat, Iain
Waldegrave, Rt Hon William


Squire, Robin (Hornchurch)
Walden, George


Stanley, Rt Hon Sir John
Walker, Bill (N Tayside)


Steen, Anthony
Waller, Gary


Stephen, Michael
Ward, John


Stem, Michael
Wardle, Charles (Bexhill)


Stewart, Allan
Waterson, Nigel


Streeter, Gary
Watts, John


Sumberg, David
Wells, Bowen


Sweeney, Walter
Wheeler, RI Hon Sir John


Sykes, John
Whitney, Ray


Tapsell, Sir Peter
Whittingdale, John


Taylor, Ian (Esher)
Widdecombe, Ann


Taylor, Rt Hon John D (Strgfd)
Wiggin, Sir Jerry


Taylor, John M (Solihull)
Wilkinson, John


Taylor, Sir Teddy (Southend, E)
Willetts, David


Temple-Moms, Peter
Wilshire, David


Thomason, Roy
Winterton, Mrs Ann (Congleton)


Thompson, Sir Donald (C'er V)
Wolfson, Mark


Thompson, Patrick (Norwich N)
Yeo, Tim


Thornton, Sir Malcolm
Young, Rt Hon Sir George


Thurnham, Peter
Tellers for the Ayes:


Townend, John (Bridlington)
Mr. Timothy Wood and


Townsend, Cyril D (Bexl'yh'th)
Mr. Derek Conway.




NOES


Abbott, Ms Diane
Carlile, Alexander (Montgomery)


Ainger, Nick
Chidgey, David


Ainsworth, Robert (Cov'try NE)
Chisholm, Malcolm


Allen, Graham
Church, Judith


Alton, David
Clapham, Michael


Anderson, Ms Janet (Ros'dale)
Clark, Dr David (South Shields)


Armstrong, Hilary
Clarke, Eric (Midlothian)


Ashdown, Rt Hon Paddy
Clarke, Tom (Monklands W)


Ashton, Joe
Clelland, David


Austin-Walker, John
Clwyd, Mrs Ann


Banks, Tony (Newham NW)
Coffey, Ann


Barnes, Harry
Cohen, Harry


Barron, Kevin
Connarty, Michael


Battle, John
Cook, Frank (Stockton N)


Bayley, Hugh
Cook, Robin (Livingston)


Beckett, Rt Hon Margaret
Corbett, Robin


Beith, Rt Hon A J
Corbyn, Jeremy


Bell, Stuart
Corston, Jean


Benn, Rt Hon Tony
Cousins, Jim


Bennett, Andrew F
Cox, Tom


Benton, Joe
Cunliffe, Lawrence


Bermingham, Gerald
Cunningham, Jim (Covy SE)


Berry, Roger
Cunningham, Rt Hon Dr John


Betts, Clive
Cunningham, Roseanna (Perth & Kinross)


Blair, Rt Hon Tony
Dalyell, Tam


Blunkett, David
Darling, Alistair


Boateng, Paul
Davies, Bryan (Oldham C'tral)


Bradley, Keith
Davies, Chris (L'Boro & S'worth)


Bray, Dr Jeremy
Davies, Rt Hon Denzil (Llanelli)


Brown, Gordon (Dunfermline E)
Davies, Ron (Caerphilly)


Brown, N (N'c'tle upon Tyne E)
Denham, John


Bruce, Malcolm (Gordon)
Dewar, Donald


Burden, Richard
Dixon, Don


Byers, Stephen
Dobson, Frank


Caborn, Richard
Donohoe, Brian H


Callaghan, Jim
Dowd, Jim


Campbell, Mrs Anne (C'bridge)
Dunwoody, Mrs Gwyneth


Campbell, Menzies (Fife NE)
Eagle, Ms Angela


Campbell, Ronnie (Blyth V)
Eastham, Ken


Campbell-Savours, D N
Etherington, Bill


Canavan, Dennis
Evans, John (St Helens N)


Cann, Jamie







Ewing, Mrs Margaret
Litherland, Robert


Fatchett, Derek
Livingstone, Ken


Faulds, Andrew
Lloyd, Tony (Stretford)


Field, Frank (Birkenhead)
Llwyd, Elfyn


Fisher, Mark
Loyden, Eddie


Flynn, Paul
Lynne, Ms Liz


Foster, Rt Hon Derek
McAllion, John


Foster, Don (Bath)
McAvoy, Thomas


Foulkes, George
McCartney, Ian


Fyfe, Maria
McCartney, Robert (North Down)


Galbraith, Sam
McCrea, The Reverend William


Galloway, George
Macdonald, Calum


Gapes, Mike
McFall, John


Garrett, John
Mackinlay, Andrew


George, Bruce
McLeish, Henry


Gerrard, Neil
Maclennan, Robert


Gilbert, Rt Hon Dr John
McNamara, Kevin


Godman, Dr Norman A
MacShane, Denis


Godsiff, Roger
McWilliam, John


Golding, Mrs Llin
Madden, Max


Gordon, Mildred
Maddock, Diana


Graham, Thomas
Mahon, Alice


Grant, Bernie (Tottenham)
Mandelson, Peter


Griffiths, Nigel (Edinburgh S)
Marek, Dr John


Griffiths, Win (Bridgend)
Marshall, David (Glasgow,


Grocott, Bruce
Shettleston)


Gunnell, John
Martlew, Eric


Hain, Peter
Maxton, John


Hall, Mike
Meacher, Michael


Hanson, David
Meale, Alan


Hardy, Peter
Michael, Alun


Harman, Ms Harriet
Michie, Bill (Sheffield Heeley)


Harvey, Nick
Michie, Mrs Ray (Argyll & Bute)


Hattersley, Rt Hon Roy
Milburn, Alan


Henderson, Doug
Miller, Andrew


Heppell, John
Mitchell, Austin (Gt Grimsby)


Hill, Keith (Streatham)
Moonie, Dr Lewis


Hinchliffe, David
Morgan, Rhodri


Hodge, Margaret
Morley, Elliot


Hoey, Kate
Morris, Rt Hon Alfred (Wy'nshawe)


Hogg, Norman (Cumbernauld)
Morris, Estelle (B'ham Yardley)


Home Robertson, John
Mowlam, Marjorie


Hood, Jimmy
Mudie, George


Hoon, Geoffrey
Mullin, Chris


Howarth, Alan (Strat'rd-on-A)
Murphy, Paul


Howarth, George (Knowsley North)
Oakes, Rt Hon Gordon


Howells, Dr Kim (Pontypridd)
O'Brien, Mike (N W'kshire)


Hoyle, Doug
O'Brien, William (Normanton)


Hughes, Kevin (Doncaster N)
O'Hara, Edward


Hughes, Robert (Aberdeen N)
Diner, Bill


Hughes, Roy (Newport E)
O'Neill, Martin


Hughes, Simon (Southwark)
Paisley, The Reverend Ian


Hutton, John
Parry, Robert


Illsley, Eric
Pearson, Ian


Ingram, Adam
Pendry, Torn


Jackson, Glenda (H'stead)
Pickthall, Calin


Jackson, Helen (Shef'ld, H)
Pike, Peter L


Jamieson, David
Pope, Greg


Janner, Greville
Powell, Ray (Ogmore)


Johnston, Sir Russell
Prentice, Bridget (Lew'm E)


Jones, Barry (Alyn and D'side)
Prentice, Gordon (Pendle)


Jones, Ieuan Wyn (Ynys Môn)
Prescott, Rt Hon John


Jones, Lynne (B'ham S O)
Primarolo, Dawn


Jones, Martyn (Clwyd, SW)
Purchase, Ken


Jones, Nigel (Cheltenham)
Quin, Ms Joyce


Jowell, Tessa
Radice, Giles


Kaufman, Rt Hon Gerald
Randall, Stuart


Keen, Alan
Raynsford, Nick


Kennedy, Charles (Ross,C&S)
Reid, Dr John


Kennedy, Jane (L'pool Br'dg'n)
Rendel, David


Khabra, Piara S
Robertson, George (Hamilton)


Kilfoyle, Peter
Robinson, Geoffrey (Co'try NW)


Kirkwood, Archy
Robinson, Peter (Belfast E)


Lestor, Joan (Eccles)
Roche, Mrs Barbara


Lewis, Terry
Rogers, Allan


Liddell, Mrs Helen
Rooker, Jeff





Rooney, Terry
Taylor, Mrs Ann (Dewsbury)


Ross, Ernie (Dundee W)
Taylor, Matthew (Truro)


Rowlands, Ted
Thompson, Jack (Wansbeck)


Ruddock, Joan
Timms, Stephen


Salmond, Alex
Tipping, Paddy


Sedgemore, Brian
Touhig, Don


Sheerman, Barry
Turner, Dennis


Sheldon, Rt Hon Robert
Tyler, Paul


Shore, Rt Hon Peter
Vaz, Keith


Short, Clare
Walker, Rt Hon Sir Harold


Simpson, Alan
Wallace, James


Skinner, Dennis
Walley, Joan


Smith, Andrew (Oxford E)
Wardell, Gareth (Gower)


Smith, Chris (Isl'ton S & F'sbury)
Wareing, Robert N


Smith, Llew (Blaenau Gwent)
Wicks, Malcolm


Snape, Peter
Wigley, Dafydd


Soley, Clive
Williams, Alan W (Carmarthen)


Spearing, Nigel
Wilson, Brian


Spellar, John
Winnick, David


Squire, Rachel (Dunfermline W)
Wise, Audrey


Steel, Rt Hon Sir David
Worthington, Tony


Steinberg, Gerry
Wray, Jimmy


Stevenson, George
Wright, Dr Tony


Stott, Roger
Young, David (Bolton SE)


Strang, Dr. Gavin
Tellers for the Noes:


Straw, Jack
Mr. Jon Owen Jones and


Sutcliffe, Gerry
Mr. John Cummings.

Question accordingly agreed to.

Resolved,

That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply, acquisition or importation otherwise than by—

(i) zero-rating or exempting supplies of goods which are, or are to be, subjected to a fiscal or other warehousing regime; or
(ii) zero-rating or exempting supplies of services on or in relation to such goods;

(b) for refunding any amount of tax otherwise than to persons constructing or converting buildings in cases where the construction or conversion is not in the course or furtherance of a business;
(c) for varying any rate at which that tax is at any time chargeable; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.

MADAM SPEAKER then, pursuant to paragraph (3) of Standing Order No. 50 (Ways and Means Motions), put forthwith the Questions necessary to dispose of the further motions.

2. SPIRITS (RATE OF DUTY)

Resolved,

That—

(1) In section 5 of the Alcoholic Liquor Duties Act 1979, for "£20.60" there shall be substituted "£19.78".
(2) This Resolution shall have effect as from 6 o'clock in the evening of 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

3. WINE AND MADE-WINE (RATES OF DUTY)

Resolved,

That—

(1) In the Table of rates of duty in Schedule 1 to the Alcoholic Liquor Duties Act 1979—
(a) in Part I of the Table for "200.64", where it appears as the rate for wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent., there shall be substituted "187.24"; and
(b) in Part II of that Table, for "20.60" there shall be substituted "19.78".
(2) Sub-paragraph (a) of paragraph (1) of this Resolution shall come into force on 1st January 1996 and sub-paragraph (b) shall have effect as from 6 o'clock in the evening of 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

4. CIDER (RATE OF DUTY)

Resolved,

That provision may be made about the rate of duty on cider under section 62 of the Alcoholic Liquor Duties Act 1979.

5. HYDROCARBON OIL (RATES OF DUTY AND REBATE)

Motion made, and Question proposed,

That—

(1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979, for "£0.3614" and "£0.3132" there shall be substituted "£0.3912" and "£0.3430", respectively.
(2) In section 8(3) of that Act, for "£0.3314" there shall be substituted "£ 0.2817".
(3) In section 11(1) of that Act, for "£0.0166" and "£0.0214" there shall be substituted "£0.0181" and "£0.0233", respectively.
(4) In section 14(1) of that Act, for "£0.0166" there shall be substituted "£ 0.0181".
(5) This Resolution shall have effect as from 6 o'clock in the evening of 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The House divided: Ayes 305, Noes 40.

Division No. 8]
[10.30 pm


AYES


Ainsworth, Peter (East Surrey)
Bonsor, Sir Nicholas


Aitken, Rt Hon Jonathan
Booth, Hartley


Alison, Rt Hon Michael (Selby)
Boswell, Tim


Mason, Rupert (Torbay)
Bottomley, Rt Hon Virginia


Amess, David
Bowden, Sir Andrew


Ancram, Michael
Bowis, John


Arnold, Jacques (Gravesham)
Boyson, Rt Hon Sir Rhodes


Arnold, Sir Thomas (Hazel Grv)
Brandreth, Gyles


Ashby, David
Brazier, Julian


Atkins, Rt Hon Robert
Bright, Sir Graham


Atkinson, David (Bour'mouth E)
Brooke, Rt Hon Peter


Atkinson, Peter (Hexham)
Brown, M (Brigg & Cl'thorpes)


Baker, Rt Hon Kenneth (Mole V)
Browning, Mrs Angela


Baker, Nicholas (North Dorset)
Bruce, Ian (Dorset)


Baldry, Tony
Budgen, Nicholas


Banks, Matthew (Southport)
Burns, Simon


Banks, Robert (Harrogate)
Burt, Alistair


Bates, Michael
Butcher, John


Batiste, Spencer
Butler, Peter


Bellingham, Henry
Carlisle, John (Luton North)


Bendall, Vivian
Carlisle, Sir Kenneth (Lincoln)


Beresford, Sir Paul
Carrington, Matthew


Biffen, Rt Hon John
Carttiss, Michael


Body, Sir Richard
Cash, William





Channon, Rt Hon Paul
Hayes, Jerry


Chapman, Sir Sydney
Heald, Oliver


Churchill, Mr
Heath, Rt Hon Sir Edward


Clappison, James
Heathcoat-Amory, David


Clark, Dr Michael (Rochford)
Hendry, Charles


Clarke, Rt Hon Kenneth (Ru'clif)
Heseltine, Rt Hon Michael


Clifton-Brown, Geoffrey
Higgins, Rt Hon Sir Terence


Coe, Sebastian
Hill, James (Southampton Test)


Colvin, Michael
Hogg, Rt Hon Douglas (G'tham)


Congdon, David
Horam, John


Coombs, Anthony (Wyre For'st)
Hordern, Rt Hon Sir Peter


Coombs, Simon (Swindon)
Howard, Rt Hon Michael


Cope, Rt Hon Sir John
Howell, Rt Hon David (G'dford)


Cormack, Sir Patrick
Howell, Sir Ralph (N Norfolk)


Couchman, James
Hughes, Robert G (Harrow W)


Cran, James
Hunt, Rt Hon David (Wirral W)


Currie, Mrs Edwina (S D'by'ire)
Hunt, Sir John (Ravensbourne)


Curry, David (Skipton & Ripon)
Hunter, Andrew


Davies, Quentin (Stamford)
Hurd, Rt Hon Douglas


Davis, David (Boothferry)
Jack, Michael


Day, Stephen
Jackson, Robert (Wantage)


Deva, Nirj Joseph
Jenkin, Bernard


Devlin, Tim
Jessel, Toby


Dicks, Terry
Johnson Smith, Sir Geoffrey


Dorrell, Rt Hon Stephen
Jones, Gwilym (Cardiff N)


Douglas-Hamilton, Lord James
Jones, Robert B (W Hertfdshr)


Dover, Den
Jopling, Rt Hon Michael


Duncan, Alan
Kellett-Bowman, Dame Elaine


Duncan-Smith, Iain
Key, Robert


Dunn, Bob
King, Rt Hon Tom


Durant, Sir Anthony
Kirkhope, Timothy


Dykes, Hugh
Knapman, Roger


Eggar, Rt Hon Tim
Knight, Mrs Angela (Erewash)


Elletson, Harold
Knight, Rt Hon Greg (Derby N)


Emery, Rt Hon Sir Peter
Knight, Dame Jill (Bir'm E'st'n)


Evans, David (Welwyn Hatfield)
Knox, Sir David


Evans, Jonathan (Brecon)
Kynoch, George (Kincardine)


Evans, Nigel (Ribble Valley)
Lait, Mrs Jacqui


Evennett, David
Lamont, Rt Hon Norman


Faber, David
Lang, Rt Hon Ian


Fabricant, Michael
Lawrence, Sir Ivan


Field, Barry (Isle of Wight)
Legg, Barry


Fishburn, Dudley
Leigh, Edward


Forman, Nigel
Lennox-Boyd, Sir Mark


Forsyth, Rt Hon Michael (Stirling)
Lester, Jim (Broxtowe)


Forth, Eric
Lidington, David


Fowler, Rt Hon Sir Norman
Lightbown, Sir David


Fox, Dr Liam (Woodspring)
Lloyd, Rt Hon Sir Peter (Fareham)


Fox, Sir Marcus (Shipley)
Lord, Michael


Freeman, Rt Hon Roger
Luff, Peter


French, Douglas
Lyell, Rt Hon Sir Nicholas


Gale, Roger
MacGregor, Rt Hon John


Gallie, Phil
MacKay, Andrew


Garnier, Edward
Maclean, Rt Hon David


Gill, Christopher
McLoughlin, Patrick


Gillan, Cheryl
McNair-Wilson, Sir Patrick


Goodlad, Rt Hon Alastair
Madel, Sir David


Goodson-Wickes, Dr Charles
Maitland, Lady Olga


Gorrnan, Mrs Teresa
Major, Rt Hon John


Gorst, Sir John
Malone, Gerald


Grant, Sir A (SW Cambs)
Mans, Keith


Greenway, Harry (Ealing N)
Marland, Paul


Greenway, John (Ryedale)
Marlow, Tony


Griffiths, Peter (Portsmouth, N)
Marshall, John (Hendon S)


Grylls, Sir Michael
Marshall, Sir Michael (Arundel)


Hague, Rt Hon William
Martin, David (Portsmouth S)


Hamilton, Sir Archibald
Mates, Michael


Hamilton, Neil (Tatton)
Mawhinney, Rt Hon Dr Brian


Hampson, Dr Keith
Mayhew, Rt Hon Sir Patrick


Hanley, R1 Hon Jeremy
Mellor, Rt Hon David


Hannam, Sir John
Merchant, Piers


Hargreaves, Andrew
Mills, Iain


Harris, David
Mitchell, Andrew (Gedling)


Haselhurst, Sir Alan
Mitchell, Sir David (NW Hants)


Hawkins, Nick
Moate, Sir Roger


Hawksley, Warren
Monro, Rt Hon Sir Hector






Montgomery, Sir Fergus
Sproat, Iain


Moss, Malcolm
Squire, Robin (Hornchurch)


Needham, Rt Hon Richard
Stanley, Rt Hon Sir John


Nelson, Anthony
Steen, Anthony


Neubert, Sir Michael
Stephen, Michael


Newton, Rt Hon Tony
Stern, Michael


Nicholls, Patrick
Stewart, Allan


Nicholson, David (Taunton)
Streeter, Gary


Norris, Steve
Sumberg, David


Onslow, Rt Hon Sir Cranley
Sweeney, Walter


Oppenheim, Phillip
Sykes, John


Ottaway, Richard
Tapsell, Sir Peter


Page, Richard
Taylor, Ian (Esher)


Paice, James
Taylor, Rt Hon John D (Strgfd)


Patnick, Sir Irvine
Taylor, John M (Solihull)


Patten, Rt Hon John
Taylor, Sir Teddy (Southend, E)


Pattie, Rt Hon Sir Geoffrey
Temple-Morris, Peter


Pawsey, James
Thomason, Roy


Peacock, Mrs Elizabeth
Thompson, Sir Donald (C'er V)


Pickles, Eric
Thompson, Patrick (Norwich N)


Porter, Barry (Wirral S)
Thornton, Sir Malcolm


Porter, David (Waveney)
Thurnham, Peter


Powell, William (Corby)
Townend, John (Bridlington)


Rathbone, Tim
Townsend, Cyril D (Bexl'yh'th)


Redwood, Rt Hon John
Tracey, Richard


Richards, Rod
Trend, Michael


Riddick, Graham
Trotter, Neville


Rifkind, Rt Hon Malcolm
Twinn, Dr Ian


Robathan, Andrew
Vaughan, Sir Gerard


Roberts, Rt Hon Sir Wyn
Viggers, Peter


Robertson, Raymond (Ab'd'n S)
Waldegrave, Rt Hon William


Robinson, Mark (Somerton)
Walden, George


Roe, Mrs Marion (Broxbourne)
Walker, Bill (N Tayside)


Rowe, Andrew (Mid Kent)
Waller, Gary


Rumbold, Rt Hon Dame Angela
Ward, John


Sackville, Torn
Wardle, Charles (Bexhill)


Sainsbury, Rt Hon Timothy
Waterson, Nigel


Scott, Rt Hon Sir Nicholas
Watts, John


Shaw, David (Dover)
Wells, Bowen


Shaw, Sir Giles (Pudsey)
Wheeler, Rt Hon Sir John


Shephard, Rt Hon Gillian
Whitney, Ray


Shepherd, Colin (Hereford)
Whittingdale, John


Shepherd, Richard (Aldridge)
Widdecombe, Ann


Shersby, Sir Michael
Wiggin, Sir Jerry


Sims Roger
Wilkinson, John


Skeet, Sir Trevor
Willetts, David


Smith, Tim (Beaconsfield)
Wilshire, David


Soames, Nicholas
Winterton, Mrs Ann (Congleton)


Speed, Sir Keith
Wolfson, Mark


Spencer, Sir Derek
Yeo, Tim


Spicer, Sir James (W Dorset)
Young, Hon Sir George


Spicer, Michael (S Worcs)
Tellers For the Ayes:


Spink, Dr Robert
Mr. Timothy Wood and


Spring, Richard
Mr. Derek Conway.




NOES


Alton, David
Kennedy, Charles (Ross, C & S)


Ashdown, Rt Hon Paddy
Kirkwood, Archy


Beggs, Roy
Lewis, Terry


Beith, Rt Hon A J
Loyden, Eddie


Bruce, Malcolm (Gordon)
Lynne, Ms Liz


Campbell, Menzies (Fife NE)
McCera, The Reverend William


Carlile, Alexander (Montgomery)
Maclennan, Robert


Chidgey, David
Maddock, Diana


Cunningham, Roseanna
Michie, Mrs Ray (Argyll & Bute)


Davies, Chris (L' Boro & S' worth)
Molyneaux, Rt Hon James


Forsythe, Clifford (S Antrim)
Paisley, The Reverend Ian


Foster, Don (Bath)
Rendel, David


Hayvey, Nick
Robinson, Peter (Belfast E)


Hughes, Simon (Southwark)
Ross, William (E Londonderry)


Johnston, Sir Russell
Salmond, Alex


Jones, Ieuan Wyn (Ynys Môn)
Skinner, Dannis


Jones, Nigel (Cheltenham)
Smyth, the Reverend Martin





Steel, Rt Hon Sir David
Wigley, Dafydd


Taylor, Matthew (Truro)



Trimble, David
Tellers For the Nose:


Tyler, Paul
Mrs. Margaret Ewing and


Wallace, James
Mr. Elfyn Llwyd.

Question accordingly agreed to.

6. HYDROCARBON OIL (REBATE ON UNLEADED PETROL)

Resolved,

That provision may be made amending section 13A of the Hydrocarbon Oil Duties Act 1979.

7. HYDROCARBON OIL (RELIEF FOR MARINE VOYAGES)

Resolved,

That provision may be made repealing sections 18 and 19(1)(a) of the Hydrocarbon Oil Duties Act 1979.

8. TOBACCO PRODUCTS (RATES OF DUTY)

Resolved,

That—

(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 there shall be substituted—

"TABLE


1. Cigarettes
An amount equal to 20 per cent. of the retail price plus £62.52 per thousand cigarettes.


2. Cigars
£91.52 per kilogram.


3. Hand-rolling tabacco
£85.94 per kilogram.


4. Other smoking tobacco and chewing tobacco
£40.24 per kilogram."

(2) This Resolution shall have effect as from 6 o'clock in the evening of 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

9. GENERAL BETTING DUTY (RATE)

Resolved,

That—

(1) In section 1(2) of the Betting and Gaming Duties Act 1981, for "7.75 per cent." there shall be substituted "6.75 per cent."
(2) This Resolution shall apply in relation to bets made on or after 1st March 1996.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

10. POOL BETTING DUTY (RATE)

Resolved,

That in section 7(1) of the Betting and Gaming Duties Act 1981, for "32.50 per cent." there shall be substituted, in relation to bets the stake money on which has been or is paid on or after 3rd December 1995, "27.50 per cent.".
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

11. AMUSEMENT MACHINE LICENCE DUTY

Resolved,

That provision may be made about amusement machine licence duty.

12. EXCISE DUTIES (REPAYMENTS, ALLOWANCES AND DRAWBACKS)

Resolved,

That provision may be made restricting the repayments, drawbacks and allowances that may be made or paid in respect of excise duties on goods.

13. VEHICLE EXCISE DUTY (INCREASE IN GENERAL RATE)

Motion made, and Question proposed,

That—

(1) In Schedule 1 to the Vehicle Excise and Registration Act 1994, in paragraph 1(2) for "£135" there shall be substituted "£140".
(2) Paragraph (1) of this Resolution applies in relation to licences taken out after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The House divided: Ayes 305, Noes 41.

Division No. 9]
[10.43 pm


AYES


Ainsworth, Peter (East Surrey)
Churchill, Mr


Aitken, Rt Hon Jonathan
Clappison, James


Alison, Rt Hon Michael (Selby)
Clark, Rt Michael (Rochford)


Allason, Rupert (Torbay)
Clarke, Rt Hon Kenneth (Ru'clif)


Amess, David
Clifton-Brown, Geoffrey


Ancram, Michael
Coe, Sebastian


Arnold, Jacques (Gravesham)
Colvin, Michael


Arnold, Sir Thomas (Hazel Grv)
Congdon, David


Ashby, David
Conway, Derek


Atkins, Rt Hon Robert
Coombs, Anthony (Wyre For'st)


Atkinson, David (Bour'mouth E)
Coombs, Simon (Swindon)


Atkinson, Peter (Hexham)
Cope, Rt Hon Sir John


Baker, Rt Hon Kenneth (Mole V)
Cormack, Sir Patrick


Baker, Nicholas (North Dorset)
Couchman, James


Baldry, Tony
Cran, James


Banks, Matthew (Southport)
Currie, Mrs Edwina (S D'by'ire)


Banks, Robert (Harrogate)
Curry, David (Skipton & Ripon)


Bates, Michael
Davies, Quentin (Stamford)


Batiste, Spencer
Davis, David (Boothferry)


Bellingham, Henry
Day, Stephen


Bendall, Vivian
Deva, Nirj Joseph


Beresford, Sir Paul
Devlin, Tim


Biffen, Rt Hon John
Dicks, Terry


Body, Sir Richard
Dorrell, Rt Hon Stephen


Bonsor, Sir Nicholas
Douglas-Hamilton, Lord James


Booth, Hartley
Dover, Den


Boswell, Tim
Duncan, Alan


Bottomley, Rt Hon Virginia
Duncan-Smith, Iain


Bowden, Sir Andrew
Dunn, Bob


Bowis, John
Durant, Sir Anthony


Boyson, Rt Hon Sir Rhodes
Dykes, Hugh


Brandreth, Gyles
Eggar, Rt Hon Tim


Brazier, Julian
Elletson, Harold


Bright, Sir Graham
Emery, Rt Hon Sir Peter


Brooke, Rt Hon Peter
Evans, David (Welwyn Hatfield)


Brown, M (Brigg & Cl'thorpes)
Evans, Jonathan (Brecon)


Browning, Mrs Angela
Evans, Nigel (Ribble Valley)


Bruce, Ian (Dorset)
Evennett, David


Budgen, Nicholas
Faber, David


Burns, Simon
Fabricant, Michael


Burt, Alistair
Field, Barry (Isle of Wight)


Butcher, John
Fishburn, Dudley


Butler, Peter
Forman, Nigel


Carlisle, John (Luton North)
Forsyth, Rt Hon Michael (Stirling)


Carlisle, Sir Kenneth (Lincoln)
Forth, Eric


Carrington, Matthew
Fowler, Rt Hon Sir Norman


Carttiiss, Michael
Fox, Dr Liam (Woodspring)


Cash, William
Fox, Sir Marcus (Shipley)


Channon, Rt Hon Paul
Freeman, Rt Hon Roger


Chapman, Sir Sydney
French, Douglas





Gale, Roger
MacKay, Andrew


Gallie, Phil
Maclean, Ht Hon David


Garnier, Edward
McLoughlin, Patrick


Gill, Christopher
McNair-Wilson, Sir Patrick


Gillan, Cheryl
Madel, Sir David


Goodlad, Rt Hon Alastair
Maitland, Lady Olga


Goodson-Wickes, Dr Charles
Major, Rt Hon John


Gorman, Mrs Teresa
Malone, Gerald


Gorst, Sir John
Mans, Keith


Grant, Sir A (SW Cambs)
Marland, Paul


Greenway, Harry (Ealing N)
Marlow, Tony


Greenway, John (Ryedale)
Marshall, John (Hendon S)


Griffiths, Peter (Portsmouth, N)
Marshall, Sir Michael (Arundel)


Grylls, Sir Michael
Martin, David (Portsmouth S)


Hague, Rt Hon William
Mates, Michael


Hamilton, Sir Archibald
Mawhinney, Rt Hon Dr Brian


Hamilton, Neil (Tatton)
Mayhew, Rt Hon Sir Patrick


Hampson, Dr Keith
Mellor, Rt Hon David


Hanley, Rt Hon Jeremy
Merchant, Piers


Hannam, Sir John
Mills, Iain


Hargreaves, Andrew
Mitchell, Andrew (Gedling)


Harris, David
Mitchell, Sir David (NW Hants)


Haselhurst, Sir Alan
Moate, Sir Roger


Hawkins, Nick
Monro, Sir Hector


Hawksley, Warren
Montgomery, Sir Fergus


Hayes, Jerry
Moss, Malcolm


Heald, Oliver
Needham, Rt Hon Richard


Heath, Rt Hon Sir Edward
Nelson, Anthony


Heathcoat-Amory, David
Neubert, Sir Michael


Hendry, Charles
Newton, Rt Hon Tony


Heseltine, Rt Hon Michael
Nicholls, Patrick


Hicks, Robert
Nicholson, David (Taunton)


Higgins, Rt Hon Sir Terence
Nicholson, Emma (Devon West)


Hill, James (Southampton Test)
Norris, Steve


Hogg, Rt Hon Douglas (G'tham)
Onslow, Rt Hon Sir Cranley


Horam, John
Oppenheim, Phillip


Hordern, Rt Hon Sir Peter
Ottaway, Richard


Howard, Rt Hon Michael
Page, Richard


Howell, Rt Hon David (G'dford)
Paice, James


Howell, Sir Ralph (N Norfolk)
Patnick, Sir Irvine


Hughes, Robert G (Harrow W)
Patten, Rt Hon John


Hunt, Rt Hon David (Wirral W)
Pattie, Rt Hon Sir Geoffrey


Hunt, Sir John (Ravensbourne)
Pawsey, James


Hunter, Andrew
Peacock, Mrs Elizabeth


Jack, Michael
Pickles, Eric


Jackson, Robert (Wantage)
Porter, Barry (Wirral S)


Jenkin, Bernard
Porter, David (Waveney)


Jessel, Toby
Powell, William (Corby)


Johnson Smith, Sir Geoffrey
Rathbone, Tim


Jones, Gwilym (Cardiff N)
Redwood, Rt Hon John


Jones, Robert B (W Hertfdshr)
Richards, Rod


Jopling, Rt Hon Michael
Riddick, Graham


Kellett-Bowman, Dame Elaine
Rifkind, Rt Hon Malcolm


Key, Robert
Robathan, Andrew


King, Rt Hon Tom
Roberts, Rt Hon Sir Wyn


Kirkhope, Timothy
Robertson, Raymond (Ab'd'n S)


Knight, Mrs Angela (Erewash)
Robinson, Mark (Somerton)


Knight, Rt Hon Greg (Derby N)
Roe, Mrs Marion (Broxbourne)


Knight, Dame Jill (Bir'm E'st'n)
Rowe, Andrew (Mid Kent)


Knox, Sir David
Rumbold, Rt Hon Dame Angela


Kynoch, George
Sackville, Tom


Lait, Mrs Jacqui
Sainsbury, Rt Hon Sir Timothy


Lamont, Rt Hon Norman
Scott, Rt Hon Sir Nicholas


Lang, Rt Hon Ian
Shaw, David (Dover)


Lawrence, Sir Ivan
Shaw, Sir Giles (Pudsey)


Legg, Barry
Shephard, Rt Hon Gillian


Leigh, Edward
Shepherd, Colin (Hereford)


Lennox-Boyd, Sir Mark
Shepherd, Richard (Aldridge)


Lester, Jim (Broxtowe)
Shersby, Michael


Lidington, David
Sims, Roger


Lightbown, Sir David
Skeet, Sir Trevor


Lloyd, Rt Hon Sir Peter (Fareham)
Smith, Tim (Beaconsfield)


Lord, Michael
Soames, Nicholas


Luff, Peter
Speed, Sir Keith


Lyell, Rt Hon Sir Nicholas
Spencer, Sir Derek


MacGregor, Rt Hon John
Spicer, Sir James (W Dorset)






Spicer, Michael (S Worcs)
Twinn, Dr Ian


Spink, Dr Robert
Vaughan, Sir Gerard


Spring, Richard
Viggers, Peter


Sproat, Iain
Waldegrave, Rt Hon William


Squire, Robin (Hornchurch)
Walden, George


Stanley, Rt Hon Sir John
Walker, Bill (N Tayside)


Steen, Anthony
Waller, Gary


Stephen, Michael
Ward, John


Stern, Michael
Wardle, Charles (Bexhill)


Stewart, Allan
Waterson, Nigel


Sumberg, David
Watts, John


Sweeney, Walter
Wells, Bowen


Sykes, John
Wheeler, Rt Hon Sir John


Tapsell, Sir Peter
Whitney, Ray


Taylor, Ian (Esher)
Whittingdale, John


Taylor, John M (Solihull)
Widdecombe, Ann


Taylor, Sir Teddy (Southend, E)
Wiggin, Sir Jerry


Temple-Morris, Peter
Willetts, David


Thomason, Roy
Wilshire, David


Thompson, Sir Donald (C'er V)
Winterton, Mrs Ann (Congleton)


Thompson, Patrick (Norwich N)
Wolfson, Mark


Thornton, Sir Malcolm
Wood, Timothy


Thurnham, Peter
Yeo, Tim


Townend, John (Bridlington)
Young, Rt Hon Sir George


Townsend, Cyril D (Bexl'yh'th)



Tracey, Richard
Tellers for the Ayes:


Trend, Michael
Mr. Roger Knapman and


Trotter, Neville
Mr. Gary Streeter




NOES


Alton, David
Maclennan, Robert


Ashdown, Rt Hon Paddy
Maddock, Diana


Beggs, Roy
Marek, Dr John


Beith, Rt Hon A J
Michie, Mrs Ray (Argyll & Bute)


Bruce, Malcolm (Gordon)
Molyneaux, Rt Hon James


Campbell, Menzies (Fife NE)
Paisley, The Reverend Ian


Carlile, Alexander (Montgomery)
Rendel, David


Chidgey, David
Robinson, Peter (Belfast E)


Corbyn, Jeremy
Ross, William (E Londonderry)


Cunningham, Roseanna
Salmond, Alex


Davies, Chris (L'Boro & S'worth)
Skinner, Dennis


Ewing, Mrs Margaret
Smyth, The Reverend Martin


Forsythe, Clifford (S Antrim)
Steel, Rt Hon Sir David


Harvey, Nick
Taylor, Rt Hon John D(Strgfd)


Johnston, Sir Russell
Taylor, Matthew (Truro)


Jones, Ieuan Wyn (Ynys Môn)
Trimble, David


Jones, Nigel (Cheltenham)
Tyler, Paul


Kennedy, Charles (Ross,C&S)
Wallace, James


Kirkwood, Archy
Wigley, Dafydd


Llwyd, Elfyn
Tellers for the Noes:


Lynne, Ms Liz
Mr. Simon Hughes and


McCrea, The Reverend William
Mr. Don Foster.

Question accordingly agreed to.

14. VEHICLE EXCISE DUTY (ELECTRICALLY PROPELLED VEHICLES)

Resolved,

That—

(1) In Schedule 1 to the Vehicle Excise and Registration Act 1994, in paragraph 2(1)(a), after "150 cubic centimetres" there shall be inserted "or the motorcycle is an electrically propelled vehicle".

(2) In paragraph 4F of that Schedule—

(a) in sub-paragraph (1), after "electrically propelled vehicle" there shall be inserted "other than a motorcycle (within the meaning of Part II of this Schedule)"; and
(b) sub-paragraph (2) shall be omitted.

(3) In section 62 of that Act, after subsection (1) there shall be inserted the following subsection—

"(1A) For the purposes of this Act, a vehicle is not an electrically propelled vehicle unless the electrical motive power is derived from—

(a) a source external to the vehicle, or
(b) an electrical storage battery which is not connected to any source of power when the vehicle is in motion."

(4) Paragraphs (1) to (3) of this Resolution apply in relation to licences taken out after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

15. VEHICLE EXCISE DUTY (STEAM POWERED VEHICLES, ETC.)

Resolved,

That—

(1) In Schedule 1 to the Vehicle Excise and Registration Act 1994, after paragraph 4E there shall be inserted the following paragraph—
4EE. A steam powered vehicle is a special concessionary vehicle.

(2) In paragraph 3 of that Schedule, in sub-paragraph (2)(b), after "excepted vehicle" there shall be inserted "or a special concessionary vehicle".

(3) In paragraph 4(2) of that Schedule, for "and is" there shall be substituted "which is not a special concessionary vehicle and which is".

(4) In paragraph 5 of that Schedule, after sub-paragraph (5) there shall be inserted the following sub-paragraph—

"(5A) A vehicle is not a recovery vehicle if it is a special concessionary vehicle."

(5) In paragraph 6(1) of that Schedule, after paragraph (b) there shall be inserted—

"and which is not a special concessionary vehicle."

(6) In paragraph 7(2) of that Schedule, after "Part IV," there shall be inserted "IVA,".

(7) In paragraph 16 of that Schedule, in sub-paragraph (1)(a), after "Part II, IV," there shall be inserted "IVA,".

(8) This Resolution applies in relation to licences taken out after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.16.

16. VEHICLE EXCISE DUTY (VEHICLES CAPABLE OF CONVEYING LOADS)

Resolved,

That—

(1) Schedule 1 to the Vehicle Excise and Registration Act 1994 shall be amended as mentioned in paragraphs (2) to (8) of this Resolution.

(2) In paragraph 4(2), immediately before paragraph (c) there shall be inserted the following paragraph—

"(bb) a vehicle falling within sub-paragraph (2A) or (2B),".

(3) After sub-paragraph (2) of paragraph 4 there shall be inserted the following sub-paragraphs—

"(2A) A vehicle falls within this sub-paragraph if—

(a) it is designed or adapted for use for the conveyance of goods or burden of any description; but
(b) it is not so used or is not so used for hire or reward or for or in connection with a trade or business.

(2B) A vehicle falls within this sub-paragraph if—

(a) it is designed or adapted for use with a semi-trailer attached; but

(b) it is not so used or, if it is so used, the semi-trailer is not used for the conveyance of goods or burden of any description."

(4) In paragraph 16(1), paragraph (b), and the word "or" immediately preceding it, shall be omitted.

(5) In paragraph 9(2), after paragraph (b) there shall be inserted "and

(c) to any rigid goods vehicle which is used loaded only in connection with a person learning to drive the vehicle or taking a driving test,".

(6) In paragraph 10(1), after "exceeding 12,000 kilograms" there shall be inserted ", which does not fall within paragraph 9(2)(b) or (c)".

(7) In paragraph 11(2), after paragraph (b) there shall be inserted "and

(c) to any tractive unit to which a semi-trailer is attached which is used loaded only in connection with a person learning to drive the tractive unit or taking a driving test,".

(8) After paragraph 18 there shall be inserted the following paragraph—

19.—(1) In this Part "driving test" means any test of competence to drive mentioned in section 89(1) of the Road Traffic Act 1988.

(2) For the purposes of this Part a vehicle or a semi-trailer is used loaded if the vehicle or, as the case may be, the semi-trailer is used for the conveyance of goods or burden of any description."

(9) In section 7 of the Vehicle Excise and Registration Act 1994, in subsection (2)—

(a) after "goods vehicle" there shall be inserted "or a special vehicle"; and
(b) after "goods vehicles" there shall be inserted "or, as the case may be, special vehicles".

(10) After subsection (7) of that section there shall be inserted the following subsection—

"(8) In this section "special vehicle" has the same meaning as in paragraph 4 of Schedule 1."

(11) Subject to paragraph (13) of this Resolution, paragraphs (1) to (8) of this Resolution apply in relation to licences taken out after 28th November 1995.

(12) Paragraph (13) of this Resolution applies where a vehicle licence is taken out—

(a) on or before 28th November 1995, and
(b) at the rate applicable (at the time it is taken out) under Schedule 1 to the Vehicle Excise and Registration Act 1994.

(13) While the licence is in force duty shall not, by virtue of this Resolution, become chargeable under section 15 of that Act.

(14) Paragraphs (9) and (10) of this Resolution apply in relation to applications made after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

17. VEHICLE EXCISE DUTY (OLD VEHICLES)

Resolved,

That—

(1) In Schedule 2 to the Vehicle Excise and Registration Act 1994, immediately before paragraph 2 there shall be inserted the following paragraph—

1A.—(1) A vehicle of a description mentioned in sub-paragraph (2) is an exempt vehicle at any time if it was constructed more than 25 years before the beginning of the year in which that time falls.

(2) The descriptions of vehicles are—

(a) a vehicle in respect of which no annual rate is specified by any provision of parts II to VIII of Schedule 1;
(b) a motorcycle which does not exceed 450 kilograms in weight unladen:

(3) In sub-paragraph (2)(b) "motorcycle" has the same meaning as in Part II of Schedule 1."

(2) In Schedule 1 to that Act, in paragraph 1—

(a) for paragraphs (a) and (b) of sub-paragraph (1) there shall be substituted "the general rate"; and
(b) sub-paragraphs (3) to (5) shall be omitted; and, in paragraph 2, sub-paragraph (2) shall be omitted.

(3) In section 2(4) of that Act, for the words from "whichever" to the end there shall be substituted "the general rate currently specified in paragraph 1(2) of Schedule 1".

(4) In that Act—

(a) in section 13, in subsection (3)(b),
(b) in section 13 as substituted under paragraph 8 of Schedule 4, in subsection (4)(b), and
(c) in section 36(3)(b),

for "1(1)(a)" there shall be substituted "1".

(5) This Resolution has effect in relation to times after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

18. VEHICLE EXCISE DUTY (REBATES)

Resolved,

That provision may be made amending section 19 of the Vehicle Excise and Registration Act 1994.

19. VALUE ADDED TAX (VALUE OF IMPORTED GOODS)

Resolved,

That—

(1) Section 21 of the Value Added Tax Act 1994 shall be amended as follows.

(2) In subsection (2) of that section at the end of paragraph (a) the word "and" shall be omitted.

(3) For paragraph (b) of that subsection there shall be substituted—

"(b) all incidental expenses, such as commission, packing, transport and insurance costs, up to the goods' first destination in the United Kingdom; and

(c) if at the time of the importation of the goods from a place outside the member States a further destination for the goods is known, and that destination is within the United Kingdom or another member State, all such incidental expenses in so far as they result from the transport of the goods to that other destination;

and in this subsection "the goods' first destination" means the place mentioned on the consignment note or any other document by means of which the goods are imported into the United Kingdom, or in the absence of such documentation it means the place of the first transfer of cargo in the United Kingdom."

(4) This Resolution shall have effect in relation to goods imported on or after 1st January 1996.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

20. VALUE ADDED TAX (FISCAL AND OTHER WAREHOUSES)

Resolved,

That provision may be made imposing charges to value added tax in connection with regimes applying to fiscal and other warehouses.

21. VALUE ADDED TAX (ANTI-AVOIDANCE: GROUPS)

Resolved,

That provision may be made about the application of section 43 of the Value Added Tax Act 1994 in cases where things are done otherwise than for a genuine commercial purpose.

22. VALUE ADDED TAX (WORK ON MATERIALS, ETC.)

Resolved,

That—

(1) The Value Added Tax Act 1994 shall be amended as follows.

(2) Section 22 shall be omitted.

(3) After subsection (2) of section 30 there shall be inserted the following subsection—

"(2A) A supply by a person of services which consist of applying a treatment or process to another person's goods is zero-rated by virtue of this subsection if by doing so he produces goods, and either—

(a) those goods are of a description for the time being specified in Schedule 8; or

(b) a supply by him of those goods to the person to whom he supplies the services would be of a description so specified.".

(4) In subsection (5) of section 55, after paragraph (b) there shall be inserted the following—

"; or

(c) any supply of services consisting in the application to another person's goods of a treatment or process which produces goods a supply of which would fall within paragraph (a) above.";

and the word "or" at the end of paragraph (a) shall be omitted.

(5) Paragraph 2 of Schedule 4 shall be omitted.

(6) This Resolution shall apply to supplies made on or after 1st January 1996.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

23. VALUE ADDED TAX (SUPPLIES OF GOLD)

Resolved,

That—

(1) In section 55 of the Value Added Tax Act 1994, for paragraph (a) of subsection (5) there shall be substituted the following paragraph—

"(a) any supply of goods consisting in fine gold, in gold
grain of any purity or in gold coins of any purity; or".

(2) This Resolution applies in relation to any supply after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

24. VALUE ADDED TAX (SMALL GIFTS)

Resolved,

That—

(1) In Schedule 4 to the Value Added Tax Act 1994, in paragraph 5(2)(a), for "£10" there shall be substituted "£15".

(2) This Resolution shall apply where a gift is made after 28th November 1995.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

25. VALUE ADDED TAX (PAYMENTS ON ACCOUNT)

Resolved,

That provision amending section 28 of the Value Added Tax Act 1994 may be made about the manner in which payments on account of value added tax are to be made.

26. VALUE ADDED TAX (PENALTIES)

Resolved,

That—

(1) In section 67 of the Value Added Tax Act 1994—

(a) in subsection (1)(a), after "6" there shall be inserted ", 7"; and
(b) in subsection (3)(a), for "or 6" there shall be substituted ", 6 or 7".

(2) Subject to paragraph (3) of this Resolution, paragraph (1) of this Resolution shall apply in relation to—

(a) any person who becomes liable to be registered by virtue of sub-paragraph (2) of paragraph 1 of Schedule 1 to the Value Added Tax Act 1994 on or after 1st January 1996; and
(b) any person who becomes liable to be registered by virtue of that sub-paragraph before that date but who has not notified the Commissioners of Customs and Excise of the liability before that date.

(3) In relation to a person falling within paragraph (2)(b) of this Resolution, section 67 of the Value Added Tax Act 1994 shall have effect as if in subsection (3)(a) for the words "the date with effect from which he is, in accordance with that paragraph, required to be registered" there were substituted "1st January 1996".

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

27. LANDFILL TAX

Resolved,

That provision may be made for charging a tax on disposals of material on or under land.

28. INCOME TAX (CHARGE AND RATES FOR 1996-97)

Motion made, and Question proposed,

That—

(1) Income tax shall be charged for the year 1996-97, and for that year—

(a) the lower rate shall be 20 per cent.;
(b) the basic rate shall be 24 per cent.; and
(c) the higher rate shall be 40 per cent.

(2) For the year 1996-97 section 1(2) of the Income and Corporation Taxes Act 1988 shall apply—

(a) as if the amount specified in paragraph (aa) were £3,900; and
(b) as if the amount specified in paragraph (b) were £25,500;

and, accordingly, section 1(4) of that Act shall not apply for the year 1996-97.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The House proceeded to a Division:—

Mr. Michael Brown: (seated and covered): On a point of order, Madam Speaker. Some Labour Members who want to vote against this motion are being forbidden to do so by Labour Whips, who are blocking the entrance to the Division Lobby. Will you have the Serjeant at Arms investigate?

Madam Speaker: Members wishing to vote one way or the other in any Division are at liberty to do so. The doors are open.

Mr. Brown: But they are not getting in, even though they want to.

Madam Speaker: If any hon. Member wants to vote, there is a door open here.

The House having divided: Ayes 313, Noes 38.

Division No.10]
[10.56 pm


AYES


Ainsworth, Peter (East Surrey)
Deva, Nirj Joseph


Aitken, Rt Hon Jonathan
Devlin, Tim


Alison, Rt Hon Michael (Selby)
Dicks, Terry


Allason, Rupert (Torbay)
Dorrell, Rt Hon Stephen


Amess, David
Douglas-Hamilton, Lord James


Ancram, Michael
Dover, Den


Arnold, Jacques (Gravesham)
Duncan, Alan


Arnold, Sir Thomas (Hazel Grv)
Duncan-Smith, Iain


Ashby, David
Dunn, Bob


Atkins, Rt Hon Robert
Durant, Sir Anthony


Atkinson, David (Bour'mouth E)
Dykes, Hugh


Atkinson, Peter (Hexham)
Eggar, Rt Hon Tim


Baker, Rt Hon Kenneth (Mole V)
Elletson, Harold


Baker, Nicholas (North Dorset)
Emery, Rt Hon Sir Peter


Baldry, Tony
Evans, David (Welwyn Hatfield)


Banks, Matthew (Southport)
Evans, Jonathan (Brecon)


Banks, Robert (Harrogate)
Evans, Nigel (Ribble Valley)


Bates, Michael
Evennett, David


Batiste, Spencer
Faber, David


Beggs, Roy
Fabricant, Michael


Bellingham, Henry
Field, Barry (Isle of Wight)


Bendall, Vivian
Fishburn, Dudley


Beresford, Sir Paul
Forman, Nigel


Biffen, Rt Hon John
Forsyth, Rt Hon Michael (Stirling)


Body, Sir Richard
Forsythe, Clifford (S Antrim)


Bonsor, Sir Nicholas
Forth, Eric


Booth, Hartley
Fowler, Rt Hon Sir Norman


Boswell, Tim
Fox, Dr Liam (Woodspring)


Bottomley, Peter (Eltham)
Fox, Sir Marcus (Shipley)


Bowden, Sir Andrew
Freeman, Rt Hon Roger


Bowis, John
French, Douglas


Boyson, Rt Hon Sir Rhodes
Gale, Roger


Brandreth, Gyles
Gallie, Phil


Brazier, Julian
Garnier, Edward


Bright, Sir Graham
Gill, Christopher


Brooke, Rt Hon Peter
Gillan, Cheryl


Brown, M (Brigg & Cl'thorpes)
Goodlad, Rt Hon Alastair


Browning, Mrs Angela
Goodson-Wickes, Dr Charles


Bruce, Ian (Dorset)
Gorman, Mrs Teresa


Budgen, Nicholas
Gorst, Sir John


Burns, Simon
Grant, Sir A (SW Cambs)


Burt, Alistair
Greenway, Harry (Ealing N)


Butcher, John
Greenway, John (Ryedale)


Butler, Peter
Griffiths, Peter (Portsmouth, N)


Carlisle, John (Luton North)
Grylls, Sir Michael


Carlisle, Sir Kenneth (Lincoln)
Hague, Rt Hon William


Carrington, Matthew
Hamilton, Sir Archibald


Carttiss, Michael
Hamilton, Neil (Tatton)


Cash, William
Hampson, Dr Keith


Channon, Rt Hon Paul
Hanley, Rt Hon Jeremy


Chapman, Sir Sydney
Hannam, Sir John


Churchill, Mr
Hargreaves, Andrew


Clappison, James
Harris, David


Clark, Dr Michael (Rochford)
Haselhurst, Sir Alan


Clarke, Rt Hon Kenneth (Ru'clif)
Hawkins, Nick


Clifton-Brown, Geoffrey
Hawksley, Warren


Coe, Sebastian
Hayes, Jerry


Colvin, Michael
Heald, Oliver


Congdon, David
Heathcoat-Amory, David


Conway, Derek
Hendry, Charles


Coombs, Anthony (Wyre For'st)
Heseltine, Rt Hon Michael


Coombs, Simon (Swindon)
Hicks, Robert


Cope, Rt Hon Sir John
Higgins, Rt Hon Sir Terence


Cormack, Sir Patrick
Hill, James (Southampton Test)


Couchman, James
Hogg, Rt Hon Douglas (G'tham)


Cran, James
Horam, John


Currie, Mrs Edwina (S D'by'ire)
Hordern, Rt Hon Sir Peter


Curry, David (Skipton & Ripon)
Howard, Rt Hon Michael


Davies, Quentin (Stamford)
Howell, Rt Hon David (G'dford)


Davis, David (Boothferry)
Howell, Sir Ralph (N Norfolk)


Day, Stephen
Hughes, Robert G (Harrow W)





Hunt, Rt Hon David (Wirral W)
Paisley, The Reverend Ian


Hunt, Sir John (Ravensbourne)
Patnick, Sir Irvine


Hunter, Andrew
Patten, Rt Hon John


Jack, Michael
Pattie, Rt Hon Sir Geoffrey


Jackson, Robert (Wantage)
Pawsey, James


Jenkin, Bernard
Peacock, Mrs Elizabeth


Jessel, Toby
Pickles, Eric


Johnson Smith, Sir Geoffrey
Porter, Barry (Wirral S)


Jones, Gwilym (Cardiff N)
Porter, David (Waveney)


Jones, Robert B (W Hertfdshr)
Powell, William (Corby)


Jopling, Rt Hon Michael
Rathbone, Tim


Kellett-Bowman, Dame Elaine
Redwood, Rt Hon John


Key, Robert
Richards, Rod


King, Rt Hon Tom
Riddick, Graham


Kirkhope, Timothy
Rifkind, Rt Hon Malcolm


Knight, Mrs Angela (Erewash)
Robathan, Andrew


Knight, R Hon Greg (Derby N)
Roberts, Rt Hon Sir Wyn


Knight, Dame Jill (Bir'm E'st'n)
Robertson, Raymond (Ab'd'n S)


Knox, Sir David
Robinson, Mark (Somerton)


Kynoch, George (Kincardine)
Robinson, Peter (Belfast E)


Lait, Mrs Jacqui
Roe, Mrs Marion (Broxbourne)


Lamont, Rt Hon Norman
Ross, William (E Londonderry)


Lang, Rt Hon Ian
Rowe, Andrew (Mid Kent)


Lawrence, Sir Ivan
Sackville, Tom


Legg, Barry
Sainsbury, Rt Hon Sir Timothy


Leigh, Edward
Scott, Rt Hon Sir Nicholas


Lennox-Boyd, Sir Mark
Shaw, David (Dover)


Lester, Jim (Broxtowe)
Shaw, Sir Giles (Pudsey)


Lidington, David
Shephard, Rt Hon Gillian


Lightbown, Sir David
Shepherd, Colin (Hereford)


Lloyd, Rt Hon Sir Peter (Fareham)
Shepherd, Richard (Aldridge)


Lord, Michael
Shersby, Sir Michael


Luff, Peter
Sims, Roger


Lyell, Rt Hon Sir Nicholas
Skeet, Sir Trevor


McCrea, The Reverend William
Smith, Tim (Beaconsfield)


MacGregor, Rt Hon John
Smyth, The Reverend Martin


MacKay, Andrew
Soames, Nicholas


Maclean, Rt Hon David
Speed, Sir Keith


McLoughlin, Patrick
Spencer, Sir Derek


McNair-Wilson, Sir Patrick
Spicer, Sir James (W Dorset)


Madel, Sir David
Spicer, Michael (S Worcs)


Maitland, Lady Olga
Spink, Dr Robert


Major, Rt Hon John
Spring, Richard


Malone, Gerald
Sproat, Iain


Mans, Keith
Squire, Robin (Hornchurch)


Marland, Paul
Stanley, Rt Hon Sir John


Marlow, Tony
Steen, Anthony


Marshall, John (Hendon S)
Stephen, Michael


Marshall, Sir Michael (Arundel)
Stern, Michael


Martin, David (Portsmouth S)
Stewart, Allan


Mates, Michael
Sumberg, David


Mawhinney, R Hon Dr Brian
Sweeney, Walter


Mayhew, Rt Hon Sir Patrick
Sykes, John


Mellor, Rt Hon David
Tapsell, Sir Peter


Merchant, Piers
Taylor, Ian(Esher)


Mills, Iain
Taylor, Rt Hon John D (Strgfd)


Mitchell, Andrew (Gedling)
Taylor, John M (Solihull)


Mitchell, Sir David (NW Hants)
Taylor, Sir Teddy (Southend, E)


Moate, Sir Roger
Temple-Morris, Peter


Molyneaux, Rt Hon James
Thomason, Roy


Monro, Rt Hon Sir Hector
Thompson, Sir Donald (C'er V)


Montgomery, Sir Fergus
Thompson, Patrick (Norwich N)


Moss, Malcolm
Thornton, Sir Malcolm


Needham, Rt Hon Richard
Thurnham, Peter


Nelson, Anthony
Townend, John (Bridlington)


Neubert, Sir Michael
Townsend, Cyril D (Bexl'yh'th)


Newton, Rt Hon Tony
Tracey, Richard


Nicholls, Patrick
Trend, Michael


Nicholson, David (Taunton)
Trimble, David


Nicholson, Emma (Devon West)
Trotter, Neville


Norris, Steve
Twinn, Dr Ian


Onslow, Rt Hon Sir Cranley
Vaughan, Sir Gerard


Oppenheim, Phillip
Viggers, Peter


Ottaway, Richard
Waldegrave, Rt Hon William


Page, Richard
Walden, George


Paice, James
Walker, Bill (N Tayside)






Waller, Gary
Wilkinson, John


Ward, John
Willetts, David


Wardle, Charles (Bexhill)
Wilshire, David


Waterson, Nigel
Winterton, Mrs Ann (Congleton)


Watts, John
Wolfson, Mark


Wells, Bowen
Wood, Timothy


Wheeler, Rt Hon Sir John
Yeo, Tim


Whitney, Ray



Whittingdale, John
Tellers for the Ayes:


Widdecombe, Ann
Mr. Roger Knapman and


Wiggin, Sir Jerry
Mr. Gary Streeter.




NOES


Alton, David
Lewis, Terry


Ashdown, Rt Hon Paddy
Llwyd, Elfyn


Beith, Rt Hon A J
Loyden, Eddie


Benn, Rt Hon Tony
Lynne, Ms Liz


Bruce, Malcolm (Gordon)
Maclennan, Robert


Campbell, Menzies (File NE)
Madden, Max


Campbell, Ronnie (Blyth V)
Maddock, Diana


Carlile, Alexander (Montgomery)
Michie, Mrs Ray (Argyll & Bute)


Chidgey, David
Pickthall, Colin


Corbyn, Jeremy
Rendel, David


Cunningham, Roseanna
Salmond, Alex


Davies, Chris (L'Boro & S'worth)
Skinner, Dennis


Davies, Rt Hon Denzil (Llanelli)
Steel, Rt Hon Sir David


Ewing, Mrs Margaret
Taylor, Matthew (Truro)


Harvey, Nick
Tyler, Paul


Johnston, Sir Russell
Wallace, James


Jones, Leuan Wyn (Ynys Môn)
Wigley, Dafydd


Jones, Lynne (B'ham S O)
Tellers for the Noes:


Jones, Nigel (Cheltenham)
Mr. Simon Hughes and


Kennedy, Charles (Ross,C&S)
Mr. Don Foster


Kirkwood, Archy
Total:18

Question accordingly agreed to.

29. LOWER RATE TAX ON SAVINGS

Resolved,

That the Income and Corporation Taxes Act 1988 shall be amended as follows—

(1) After section 1 there shall be inserted the following section—
['APPLICATION OF LOWER RATE TO INCOME FROM SAVINGS]

1A.—(1) Subject to sections 469(2) and 686, so much of any person's total income for any year of assessment as—

(a) comprises income to which this section applies, and

(b) in the case of an individual, is not income falling within section 1(2)(b),

shall, by virtue of this section, be charged for that year at the lower rate, instead of at the rate otherwise applicable to it in accordance with section 1(2)(aa) and (a).

(2) Subject to subsection (4) below, this section applies to the following income—

(a) any income chargeable under Case III of Schedule D other than—

(i) relevant annuities and other annual payments that are not interest; and
(ii) amounts so chargeable by virtue of section 119 or 120;

(b) any income chargeable under Schedule F; and
(c) subject to subsection (4) below, any equivalent foreign income.

(3) The income which is equivalent foreign income for the purposes of this section is any income chargeable under Case IV or V of Schedule D which—

(a) is equivalent to a description of income falling within subsection (2)(a) above but arises from securities or other possessions out of the United Kingdom; or

(b) consists in any such dividend or other distribution of a company not resident in the United Kingdom as would be chargeable under Schedule F if the company were resident in the United Kingdom.

(4) This section does not apply to—

(a) any income chargeable to tax under Case IV or V of Schedule D which is such that section 65(5)(a) or (b) provides for the tax to be computed on the full amount of sums received in the United Kingdom; or
(b) any amounts deemed by virtue of section 695(4)(b) or 696(6) to be income chargeable under Case IV of Schedule D.

(5) So much of any person's income as comprises income to which this section applies shall be treated for the purposes of subsection (1)(b) above and any other provisions of the Income Tax Acts as the highest part of his income.

(6) Subsection (5) above shall have effect subject to section 833(3) but shall otherwise have effect notwithstanding any provision requiring income of any description to be treated for the purposes of the Income Tax Acts (other than section 550) as the highest part of a person's income.

(7) In this section "relevant annuity" means any annuity other than a purchased life annuity to which section 656 applies or to which that section would apply but for section 657(2)(a)."

(2) In section 4, after subsection (1) there shall be inserted the following subsection—

"(1A) As respects deductions from, and tax treated as paid on, any such amounts as constitute or (but for the person whose income they are) would constitute income to which section 1 A applies, subsection (1) above shall have effect with a reference to the lower rate in force for the relevant year of assessment substituted for the reference to the basic rate in force for that year."

(3) In section 326B—

(a) in subsection (2)(b)(ii), for the words from "basic rate on" to the end of the sub-paragraph there shall be substituted "applicable rate on any interest or bonus paid on the account before that time;" and
(b) after subsection (2) there shall be inserted the following subsection—

"(2A) In subsection (2)(b)(ii) above "the applicable rate" means—

(a) in the case of interest or bonus paid before 6th April 1996, the basic rate for the year of assessment in which the payment was made; and
(b) in any other case, the lower rate for the year of assessment in which it was made."

(4) In section 350, in subsection (1), for "basic rate" there shall be substituted "applicable rate"; and after that subsection there shall be inserted the following subsection—

"(1A) In subsection (1) above "the applicable rate" means the rate which is applicable to the payment under section 4."

(5) In paragraph (a)(i) of subsection (2) of section 582, for "basic" there shall be substituted "applicable"; and after that subsection there shall be inserted the following subsection—

"(2A) In subsection (2) above "the applicable rate", in relation to a year of assessment, means whichever of the basic rate or the lower rate for that year is the rate at which the person by or through whom the bonds are issued would have had to deduct income tax from the amount of interest in question if that amount had been actually paid by or through him."

(6) In subsection (I) of section 737, after "shall apply" there shall be inserted "(subject to subsection (1A) below)"; and for subsection (1A) of that section there shall be substituted the following subsection—

"(1A) The deduction of tax which is deemed to have been made under subsection (1) above shall be taken to have been made at the lower rate as if the deemed annual payment were income to which section IA applied; and—

(a) the reference to the applicable rate in subsection (1) of section 350, so far as it has effect by virtue of subsection (1) above, and

(b) Schedule 16, so far as it so has effect,

shall be construed accordingly."

(7) In section 737C(6), for "basic" there shall be substituted "lower".

(8) In Schedule 3—

(a) in paragraph 1(c), for "basic" there shall be substituted "lower"; and
(b) in paragraph 6A—

(i) in sub-paragraph (1), for "applicable" there shall be substituted "lower"; and
(ii) sub-paragraph (4) shall cease to have effect.

(9) Paragraphs (1) and (5) to (7) of this Resolution have effect in relation to the year 1996-97 and subsequent years of assessment, paragraphs (2), (4) and (8) of this Resolution have effect in relation to payments on or after 6th April 1996, and paragraph (3) of this Resolution has effect as respects withdrawals on or after 6th April 1996.

(10) Where any subordinate legislation (within the meaning of the Interpretation Act 1978) falls to be construed in accordance with section 4 of the Income and Corporation Taxes Act 1988, that legislation (whenever it was made) shall be construed, in relation to payments on or after 6th April 1996, subject to subsection (1A) of that section.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

30. INCOME TAX (PERSONAL ALLOWANCES)

Resolved,

That—

(1) For the year 1996-97, the amounts specified in the provisions mentioned in paragraph (2) of this Resolution shall be taken to be as set out in that paragraph; and, accordingly, section 257C(1) of the Income and Corporation Taxes Act 1988, so far as it relates to the amounts so specified, shall not apply for the year 1996-97.
(2) In section 257 of that Act—

(a) the amount in subsection (1) shall be £3,765;
(b) the amount in subsection (2) shall be £4,910; and
(c) the amount in subsection (3) shall be £5,090.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

31. BLIND PERSON'S ALLOWANCE

Resolved,

That—

(1) In section 265(1) of the Income and Corporation Taxes Act 1988, for "£1,200" there shall be substituted "£1,250".

(2) This Resolution shall apply for the year 1996-97.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

32. RELIEF FOR INTEREST (LIMIT FOR 1996-97)

Resolved,

That, for the year 1996-97, the qualifying maximum defined in section 367(5) of the Income and Corporation Taxes Act 1988 shall be £30,000.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

33. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1996)

Resolved,

That corporation tax shall be charged for the financial year 1996 at the rate of 33 per cent.

34. CORPORATION TAX (SMALL COMPANIES: 1996)

Resolved,

That, for the financial year 1996—

(a) the small companies' rate shall be 24 per cent.; and
(b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988 shall be nine four-hundredths.

35. GOVERNMENT SECURITIES, ETC.

Resolved,

That provision may be made about government securities and securities on which amounts are payable out of public revenue or out of the revenue of any government or of any public or local authority or institution outside the United Kingdom.

36. LOAN RELATIONSHIPS

Resolved,

That provision may be made for the purposes of corporation tax about relationships in which a company stands, or is to be treated as standing, in the position of a creditor or debtor in relation to a debt arising from the lending of money.

37. DISCOUNTED SECURITIES

Resolved,

That provision may be made for the purposes of income tax about securities issued at a discount.

38. LIVING ACCOMMODATION PROVIDED FOR EMPLOYEES

Resolved,

That provision may be made about the amount chargeable to income tax where living accommodation is provided for a person by reason of his employment.

39. BENEFICIAL LOANS

Resolved,

That provision may be made amending the provisions of the Income and Corporation Taxes Act 1988 dealing with beneficial loan arrangements.

40. PAYE SETTLEMENT AGREEMENTS

Resolved,

That provision may be made for modifying the effect of the Income Tax Acts in cases where an agreement is made between the Commissioners of Inland Revenue and another person as to the amount in respect of tax on the emoluments of employees or office-holders for which that other person is to be accountable to those Commissioners.

41. SELF-ASSESSMENT

Resolved,

That provision for the purpose of facilitating the operation of self-assessment may be made about the manner in which, the periods as respects which and the times at which—

(a) assessments may be made or varied, and
(b) matters may be determined for the purposes of the making of assessments.

42. PAYMENTS ON ACCOUNT OF LIABILITY TO INCOME TAX

Resolved,

That provision may be made relating to payments on account of liability to income tax.

43. CHARITABLE DONATIONS (PAYROLL DEDUCTION SCHEMES)

Resolved,

That, for the year 1996-97, section 202(7) of the Income and Corporation Taxes Act 1988 shall have effect with the substitution of "£1,200" for "£900".

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

44. SHARE OPTION SCHEMES

Resolved,

That provision (including provision having retrospective effect) may be made about share option schemes, rights obtained under such schemes and shares obtained by the exercise of such rights.

45. TAX RELIEF FOR CLASS 4 CONTRIBUTIONS

Resolved,

That provision may be made about tax relief for Class 4 contributions within the meaning of the Social Security Contributions and Benefits Act 1992 and the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

46. RELIEF FOR CERTAIN ANNUAL PAYMENTS

Resolved,

That section 347A of the Income and Corporation Taxes Act 1988 shall apply to any payment made on or after 6th April 1996—

(a) in pursuance of any obligation which falls within section 36(4)(a) of the Finance Act 1988, and
(b) for the benefit, maintenance or education of a person (whether or not the person to whom the payment is made) who attained the age of 21 before 6th April 1994,

as if that obligation were not an existing obligation within the definition contained in section 36(4) of the Finance Act 1988.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

47. GOVERNMENT PILOT SCHEMES

Resolved,

That provision may be made for the purposes of income tax about temporary arrangements made by the Secretary of State or any Northern Ireland department for the purpose of facilitating a decision as to whether, or to what extent, provision should be made on a permanent basis for or in relation to the payment of a benefit, allowance, grant or other amount.

48. FOREIGN INCOME DIVIDENDS

Resolved,

That provision may be made about foreign income dividends.

49. UNAUTHORISED UNIT TRUSTS

Resolved,

That provision may be made about the rate at which income tax is chargeable on income arising to the trustees of a unit trust scheme to which section 469 of the Income and Corporation Taxes Act 1988 applies.

50. TRANSFER ON DEATH UNDER THE ACCRUED INCOME SCHEME

Resolved,

That provision may be made amending section 721 of the Income and Corporation Taxes Act 1988.

51. PAYING AGENTS AND COLLECTING AGENTS

Resolved,

That provision may be made about dividends falling to be paid or received by persons acting, or treated as acting, as paying agents or collecting agents.

52. MANUFACTURED PAYMENTS, REPOS, ETC.

Resolved,

That provision may be made about manufactured payments, about the sale and repurchase of securities and about the amount taken to be paid or payable in respect of any sale, repurchase or other transfer of securities to which a manufactured payment relates.

53. CANCELLATION OF TAX ADVANTAGES (TRANSACTIONS IN SECURITIES)

Resolved,

That provision may be made amending paragraph D of section 704 of the Income and Corporation Taxes Act 1988.

54. TRUST MANAGEMENT EXPENSES

Resolved,

That provision may be made about the setting-off of trust management expenses against income.

55. INSURANCE AND CAPITAL REDEMPTION BUSINESS

Resolved,

That provision (including provision having retrospective effect) may be made for the purposes of corporation tax about the carrying on of insurance business and about capital redemption business.

56. INSURANCE COMPANIES (PROVISIONAL REPAYMENTS)

Resolved,

That provision may be made amending Schedule 19AB to the Income and Corporation Taxes Act 1988.

57. QUALIFYING LIFE INSURANCE POLICIES

Resolved,

That provision may be made in connection with the requirements to be satisfied if a policy of life insurance is to be a qualifying policy.

58. LOANS TO PARTICIPATORS, ETC.

Resolved,

That provision may be made amending section 419 of the Income and Corporation Taxes Act 1988.

59. CHARGEABLE GAINS (NON-RESIDENT COMPANIES)

Resolved,

That provision may be made amending section 13 of the Taxation of Chargeable Gains Act 1992.

60. CONTROLLED FOREIGN COMPANIES

Resolved,

That provision may be made amending Chapter IV of Part XVII of the Income and Corporation Taxes Act 1988.

61. DIRECTIONS RELATING TO SALES AT AN UNDERVALUE OR OVERVALUE

Resolved,

That provision (including provision having retrospective effect) may be made amending subsection (3) of section 770 of the Income and Corporation Taxes Act 1988 and the provision re-enacted in that subsection.

62. PETROLEUM EXPLORATION

Resolved,

That provision (including provision having retrospective effect) may be made about the disposal of assets consisting in, or connected with, a licence or other right to search for or win petroleum.

63. INHERITANCE TAX RELIEFS

Resolved,

That provision may be made amending sections 113A and 124A of the Inheritance Tax Act 1984.

64. BANKING

Resolved,

That provision may be made in connection with banking.

65. QUOTATION OR LISTING OF SECURITIES

Resolved,

That provision may be made for modifying references in enactments relating to taxation to the quotation or listing of securities.

66. COPYRIGHT, DESIGNS AND ARTISTS' RECEIPTS

Resolved,

That provision may be made with respect to sections 534, 535, 537, 537A and 538 of the Income and Corporation Taxes Act 1988.

67. STAMP DUTY (SPOILED INSTRUMENTS)

Resolved,

That provision may be made about stamp duty where—

(a) an instrument is inadvertently and undesignedly spoiled; and
(b) another instrument is made between the same parties and for the same purpose.

68. STAMP DUTY RESERVE TAX

Resolved,

That provision may be made about stamp duty reserve tax.

69. SCHEDULE 2 TO THE AGRICULTURE ACT 1993

Resolved,

That provision (including provision having retrospective effect) may be made modifying the operation of Part 1 of Schedule 2 to the Agriculture Act 1993.

70. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Resolved,

That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from taxation.

Orders of the Day — PROCEDURE (FUTURE TAXATION)

Resolved,

That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision taking effect in a future year for amending section 186 of the Income and Corporation Taxes Act 1988.

Orders of the Day — FINANCE [MONEY]

Queen's Recommendation having been signified—

Resolved,

That, for the purposes of any Act of the present Session relating to finance, it is expedient to authorise the payment out of money provided by Parliament of sums payable by the Secretary of State by virtue of provisions of that Act relating to vehicle excise and registration.

Bill ordered to be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Secretary Heseltine, Mr. Secretary Howard, Mr. Secretary Lang, Mr. Secretary Gummer, Mr. Secretary Lilley, Mr. Secretary Don-ell, Mr. William Waldegrave, Mr. David Heathcoat-Amory, Mrs. Angela Knight and Mr. Michael Jack do prepare and bring it in.

Orders of the Day — FINANCE BILL

Mr. Jack accordingly presented a Bill to grant certain duties, to alter other duties, to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 12.]

PUBLIC EXPENDITURE

MADAM SPEAKER then proceeded to put forthwith the questions necessary to dispose of proceedings on the Motion relating to Public Expenditure, pursuant to Order [22 November].

Motion made, and Question proposed,

That this House welcomes the public expenditure plans announced by Mr. Chancellor of the Exchequer in his Budget speech on 28th November; congratulates Her Majesty's Government on its continued firm control of public spending and its success in reducing bureaucracy, increasing efficiency and tackling fraud, while providing more resources for the delivery of key public services; applauds Her Majesty's Government's determination to reduce further the share of national income taken by the State; and commends the Government for the success of its Private Finance Initiative and the other innovative ways it is forming partnerships with the private sector to improve the efficiency and quality of public services.—[Dr. Liam Fox.]

Amendment proposed to the Question, to leave out from "House" to the end of the Question and to add instead thereof:

'rejects the waste, misallocation of resources, the wrong choice of priorities and the huge bills paid for an economic failure which has taken Britain under the Conservatives from 13th to 18th in the world prosperity league and which has brought the real cuts in front-line services now contained in the Government's public expenditure statement; recognises the unacceptable levels and effects of unemployment including the cost to public finances now at £20 billion a year and the fact that it is because the Government is spending these huge sums paying the bills of failure that it is now cutting capital investment, cutting entitlements to social security and overseas aid and cutting the school milk scheme; calls for a welfare to work programme financed by a windfall levy on the monopoly


utilities that will get people back to work, reduce the costs of economic failure and release resources for front-line public services; notes that the Government's Budget proposals are a sleight of hand, because what is given with one hand is taken with the other through increases in Council Tax, prescription charges, rent levels, postal charges and transport costs; calls for an approach based on fairness and progressivity, encouraging work and opportunity, with a strategy for long-term productive investment, skills, employment and regional development; on expenditure priorities, calls on the Government to release capital receipts on a phased basis to allow local authority building and employment creation as a result; calls for switches of resources to smaller class sizes from phasing out the Assisted Places Scheme, to front line patient care from the cost of National Health Service bureaucracy and to investment in transport from the cost of rail privatisation; and calls for the transformation of the failed private finance initiative which has become a back door for privatisation into genuine public-private partnership, with a new taskforce to get investment moving'.—[Mr. Andrew Smith.]

Question put, That the amendment be made:—

The House divided: Ayes 257, Noes 310.

Division No. 11]
[11.10 pm


AYES


Abbott, Ms Diane
Corbett, Robin


Ainger, Nick
Corbyn, Jeremy


Ainsworth, Robert (Cov'try NE)
Corston, Jean


Allen, Graham
Cousins, Jim


Anderson, Ms Janet (Ros'dale)
Cox, Tom


Armstrong, Hilary
Cummings, John


Ashton, Joe
Cunliffe, Lawrence


Austin-Walker, John
Cunningham, Jim (Covy SE)


Banks, Tony (Newham NW)
Cunningham, Rt Hon Dr John


Barnes, Harry
Cunningham, Roseanna


Barron, Kevin
Dalyell, Tam


Battle, John
Darling, Alistair


Bayley, Hugh
Davies, Bryan (Oldham C'tral)


Beckett, Rt Hon Margaret
Davies, Rt Hon Denzil (Llanelli)


Bell, Stuart
Davies, Ron (Caerphilly)


Benn, Rt Hon Tony
Denham, John


Bennett, Andrew F
Dewar, Donald


Benton, Joe
Dixon, Don


Bermingham, Gerald
Dobson, Frank


Berry, Roger
Donohoe, Brian H


Betts, Clive
Dowd, Jim


Blunkett, David
Dunwoody, Mrs Gwyneth


Boateng, Paul
Eagle, Ms Angela


Bradley, Keith
Eastham, Ken


Bray, Dr Jeremy
Etherington, Bill


Brown, Gordon (Dunfermline E)
Evans, John (St Helens N)


Brown, N (N'c'tle upon Tyne E)
Ewing, Mrs Margaret


Burden, Richard
Fatchett, Derek


Byers, Stephen
Faulds, Andrew


Caborn, Richard
Field, Frank (Birkenhead)


Callaghan, Jim
Fisher, Mark


Campbell, Mrs Anne (C'bridge)
Flynn, Paul


Campbell, Ronnie (Blyth V)
Foster, Rt Hon Derek


Campbell-Savours D.N
Foulkes, George


Canavan, Dennis
Fyfe, Maria


Cann, Jamie
Galbraith, Sam


Chisholm, Malcolm
Galloway, George


Church, Judith
Gapes, Mike


Clapham, Michael
Garrett, John


Clark, Dr David (South Shields)
George, Bruce


Clarke, Eric (Midlothian)
Gerrard, Neil


Clarke, Tom (Monklands W)
Gilbert, Rt Hon Dr John


Clelland, David
Godman, Dr Norman A


Clwyd, Mrs Ann
Godsiff, Roger


Coffey, Ann
Golding, Mrs Llin


Cohen, Harry
Gordon, Mildred


Connarty, Michael
Graham, Thomas


Cook, Frank (Stockton N)
Grant, Bernie (Tottenham)


Cook, Robin (Livingston)
Griffiths, Nigel (Edinburgh S)





Griffiths, Win (Bridgend)
Moonie, Dr Lewis


Grocott, Bruce
Morgan, Rhodri


Gunnell, John
Morley, Elliot


Hain, Peter
Morris, Rt Hon Alfred (Wy'nshawe)


Hall, Mike
Morris, Estelle (B'ham Yardley)


Hanson, David
Morris, RI Hon John (Aberavon)


Hardy, Peter
Mowlam, Marjorie


Harman, Ms Harriet
Mudie, George


Hattersley, Rt Hon Roy
Mullin, Chris


Henderson, Doug
Murphy, Paul


Heppell, John
Oakes, Rt Hon Gordon


Hill, Keith (Streatham)
O'Brien, Mike (N W'kshire)


Hinchliffe, David
O'Brien, William (Normanton)


Hodge, Margaret
O'Hara, Edward


Hoey, Kate
Olner, Bill


Hogg, Norman (Cumbernauld)
Paisley, The Reverend Ian


Home Robertson, John
Parry, Robert


Hood, Jimmy
Pearson, Ian


Hoon, Geoffrey
Pendry, Tom


Howarth, Alan (Strat'rd-on-A)
Pickthall, Colin


Howarth, George (Knowsley North)
Pike, Peter L


Howells, Dr Kim (Pontypridd)
Pope, Greg


Hoyle, Doug
Powell, Ray (Ogmore)


Hughes, Kevin (Doncaster N)
Prentice, Bridget (Lew'm E)


Hughes, Robert (Aberdeen N)
Prentice, Gordon (Pendle)


Hughes, Roy (Newport E)
Prescott, Rt Hon John


Hutton, John
Primarolo, Dawn


Illsley, Eric
Purchase, Ken


Ingram, Adam
Quin, Ms Joyce


Jackson, Glenda (H'stead)
Radice, Giles


Jackson, Helen (Shef'ld H)
Raynsford, Nick


Jamieson, David
Reid, Dr John


Janner, Greville
Robertson, George (Hamilton)


Jones, Barry (Alyn and D'side)
Robinson, Geoffrey (Co'try NW)


Jones, Ieuan Wyn (Ynys Môn)
Robinson, Peter (Belfast E)


Jones, Jon Owen (Cardiff C)
Roche, Mrs Barbara


Jones, Lynne (B'ham S O)
Rogers, Allan


Jones, Martyn (Clwyd, SW)
Rooker, Jeff


Jowell, Tessa
Rooney, Terry


Kaufman, Rt Hon Gerald
Ross, Ernie (Dundee W)


Keen, Alan
Rowlands, Ted


Khabra, Piara S
Ruddock, Joan


Kilfoyle, Peter
Salmond, Alex


Lestor, Joan (Eccles)
Sedgemore, Brian


Lewis, Terry
Sheerman, Barry


Liddell, Mrs Helen
Sheldon, Rt Hon Robert


Litherland, Robert
Short, Clare


Livingstone, Ken
Simpson, Alan


Lloyd, Tony (Stretford)
Skinner, Dennis


Llwyd, Elfyn
Smith, Andrew (Oxford E)


Loyden, Eddie
Smith, Chris (Isl'ton S & F'sbury)


McAllion, John
Smith, Llew (Blaenau Gwent)


McAvoy, Thomas
Shape, Peter


McCartney, Ian
Soley, Clive


McCrea, The Reverend William
Spearing, Nigel


Macdonald, Calum
Spellar, John


McFall, John
Squire, Rachel (Dunfermline W)


Mackinlay, Andrew
Steinberg, Gerry


McLeish, Henry
Stevenson, George


McNamara, Kevin
Stott, Roger


MacShane, Denis
Strang, Dr. Gavin


McWilliam, John
Straw, Jack


Madden, Max
Sutcliffe, Gerry


Mahon, Alice
Taylor, Mrs Ann (Dewsbury)


Mandelson, Peter
Thompson, Jack (Wansbeck)


Marek, Dr John
Timms, Stephen


Marshall, David (Shettleston)
Tipping, Paddy


Martlew, Eric
Touhig, Don


Maxton, John
Vaz, Keith


Meacher, Michael
Walker, Rt Hon Sir Harold


Meale, Alan
Walley, Joan


Michael, Alun
Wardell, Gareth (Gower)


Michie, Bill (Sheffield Heeley)
Wicks, Malcolm


Milburn, Alan
Wigley, Dafydd


Miller, Andrew
Williams, Alan W (Carmarthen)


Mitchell, Austin (Gt Grimsby)
Wilson, Brian






Winnick, David
Young, David (Bolton SE)


Wise, Audrey



Worthington, Tony
Tellers for the Ayes:


Wray, Jimmy
Mrs. Jane Kennedy and


Wright, Dr Tony
Mr. Dennis Turner.




NOES


Ainsworth, Peter (East Surrey)
Davis, David (Boothferry)


Aitken, Rt Hon Jonathan
Day, Stephen


Alison, Rt Hon Michael (Selby)
Deva, Nirj Joseph


Allason, Rupert (Torbay)
Devlin, Tim


Amess, David
Dicks, Terry


Ancram, Michael
Dorrell, Rt Hon Stephen


Arnold, Jacques (Gravesham)
Douglas-Hamilton, Lord James


Arnold, Sir Thomas (Hazel Grv)
Dover, Den


Ashby, David
Duncan, Alan


Atkins, Rt Hon Robert
Duncan-Smith, Iain


Atkinson, David (Bour'mouth E)
Dunn, Bob


Atkinson, Peter (Hexham)
Durant Sir Anthony


Baker, Rt Hon Kenneth (Mole V)
Dykes, Hugh


Baker, Nicholas (North Dorset)
Eggar, Rt Hon Tim


Baldry, Tony
Elletson, Harold


Banks, Matthew (Southport)
Emery, Rt Hon Sir Peter


Banks, Robert (Harrogate)
Evans, David (Welwyn Hatfield)


Bates, Michael
Evans, Jonathan (Brecon)


Batiste, Spencer
Evans, Nigel (Ribble Valley)


Beggs, Roy
Evennett, David


Bellingham, Henry
Faber, David


Bendell, Vivian
Fabricant, Michael


Beresford, Sir Paul
Field, Barry (Isle of Wight)


Biffen, Rt Hon John
Fishburn, Dudley


Body, Sir Richard
Forman, Nigel


Bonsor, Sir Nicholas
Forsyth, Rt Hon Michael (Stirling)


Booth, Hartley
Forsythe, Clifford (S Antrim)


Boswell, Tim
Forth, Eric


Bottomley, Rt Hon Virginia
Fowler, Rt Hon Sir Norman


Bowden, Sir Andrew
Fox, Dr Liam (Woodspring)


Bowls, John
Fox, Sir Marcus (Shipley)


Boyson, Rt Hon Sir Rhodes
Freeman, Rt Hon Roger


Brandreth, Gyles
French, Douglas


Brazier, Julian
Gale, Roger


Bright, Sir Graham
Gallie, Phil


Brooke, Rt Hon Peter
Garnier, Edward


Brown, M (Brigg & Cl'thorpes)
Gill, Christopher


Browning, Mrs Angela
Gillan, Cheryl


Bruce, Ian (Dorset)
Goodlad, Rt Hon Alastair


Budgen, Nicholas
Goodson-Wickes, Dr Charles


Burns, Simon
Gorman, Mrs Teresa


Burt, Alistair
Gorst, Sir John


Butcher, John
Grant, Sir A (SW Cambs)


Butler, Peter
Greenway, Harry (Ealing N)


Carlisle, John (Luton North)
Greenway, John (Ryedale)


Carlisle, Sir Kenneth (Lincoln)
Griffiths, Peter (Portsmouth, N)


Carrington, Matthew
Grylls, Sir Michael


Carttiss, Michael
Hague, Rt Hon William


Cash, William
Hamilton, Sir Archibald


Channon, Rt Hon Paul
Hamilton, Neil (Tatton)


Chapman, Sir Sydney
Hampson, Dr Keith


Churchill, Mr
Hanley, Rt Hon Jeremy


Clappison, James
Hannam, Sir John


Clark, Dr Michael (Rochford)
Hargreaves, Andrew


Clarke, Rt Hon Kenneth (Ru'clif)
Harris, David


Clifton-Brown, Geoffrey
Haselhurst, Sir Alan


Coe, Sebastian
Hawkins, Nick


Colvin, Michael
Hawksley, Warren


Congdon, David
Hayes, Jerry


Conway, Derek
Heald, Oliver


Coombs, Anthony (Wyre For'st)
Heathcoat-Amory, David


Coombs, Simon (Swindon)
Hendry, Charles


Cope, Rt Hon Sir John
Heseltine, Rt Hon Michael


Cormack, Sir Patrick
Hicks, Robert


Couchman, James
Higgins, Rt Hon Sir Terence


Cran, James
Hill, James (Southampton Test)


Currie, Mrs Edwina (S D'by'ire)
Hogg, Rt Hon Douglas (G'tham)


Curry, David (Skipton & Ripon)
Horam, John


Davies, Quentin (Stamford)
Hordern, Rt Hon Sir Peter





Howard, Rt Hon Michael
Page, Richard


Howell, Rt Hon David (G'dford)
Paice, James


Howell, Sir Ralph (N Norfolk)
Patnick, Sir Irvine


Hughes, Robert G (Harrow W)
Patten, Rt Hon John


Hunt, Rt Hon David (Wirral W)
Pattie, Rt Hon Sir Geoffrey


Hunt, Sir John (Ravensbourne)
Pawsey, James


Hunter, Andrew
Peacock, Mrs Elizabeth


Jack, Michael
Pickles, Eric


Jackson, Robert (Wantage)
Porter, Barry (Wirral S)


Jenkin, Bernard
Porter, David (Waveney)


Jessel, Toby
Powell, William (Corby)


Johnson Smith, Sir Geoffrey
Rathbone, Tim


Jones, Gwilym (Cardiff N)
Redwood, Rt Hon John


Jones, Robert B (W Hertfdshr)
Richards, Rod


Jopling, Rt Hon Michael
Riddick, Graham


Kellett-Bowman, Dame Elaine
Rifkind, Rt Hon Malcolm


Key, Robert
Robathan, Andrew


King, Rt Hon Tom
Roberts, Rt Hon Sir Wyn


Kirkhope, Timothy
Robertson, Raymond (Ab'd'n S)


Knight, Mrs Angela (Erewash)
Robinson, Mark (Somerton)


Knight, Rt Hon Greg (Derby N)
Roe, Mrs Marion (Broxbourne)


Knight, Dame Jill (Bir'm E'st'n)
Ross, William (E Londonderry)


Knox, Sir David
Rowe, Andrew (Mid Kent)


Kynoch, George (Kincardine)
Rumbold, Rt Hon Dame Angela


Lait, Mrs Jacqui
Sackville, Tom


Lamont, Rt Hon Norman
Sainsbury, Rt Hon Sir Timothy


Lang, Rt Hon Ian
Scott, Rt Hon Sir Nicholas


Lawrence, Sir Ivan
Shaw, David (Dover)


Legg, Barry
Shaw, Sir Giles (Pudsey)


Leigh, Edward
Shepherd, Rt Hon Gillian


Lennox-Boyd, Sir Mark
Shepherd, Colin (Hereford)


Lester, Jim (Broxtowe)
Shepherd, Richard (Aldridge)


Lidington, David
Shersby, Sir Michael


Lloyd, Rt Hai Sir Peter (Fareham)
Sims, Roger


Lord, Michael
Skeet, Sir Trevor


Luff, Peter
Smith, Tim (Beaconsfield)


Lyell, Rt Hon Sir Nicholas
Smyth, The Reverend Martin


MacGregor, Rt Hon John
Soames, Nicholas


MacKay, Andrew
Speed, Sir Keith


Maclean, Rt Hon Davi
Spencer, Sir Derek


McLoughlin, Patrick
Spicer, Sir James (W Dorset)


McNair-Wilson, Sir Patrick
Spicer, Michael (S Worcs)


Madel, Sir David
Spink, Dr Robert


Maitland, Lady Olga
Spring, Richard


Major, Rt Hon John
Sproat, Iain


Malone, Gerald
Squire, Robin (Hornchurch)


Mans, Keith
Stanley, Rt Hon Sir John


Marland, Paul
Steen, Anthony


Marlow, Tony
Stephen, Michael


Marshall, John (Hendon S)
Stem, Michael


Marshal, Sir Michael (Arundel)
Stewart, Allan


Martin, David (Portsmouth S)
Sumberg, David


Mates, Michael
Sweeney, Waiter


Mawhinney, Rt Hon Dr Brian
Sykes, John


Mayhew, Rt Hon Sir Patrick
Tapsell, Sir Peter


Mellor, Rt Hon David
Taylor, Ian (Esher)


Merchant, Piers
Taylor, Rt Hon John D (Strgfd)


Mills, Iain
Taylor, John M (Solihull)


Mitchell, Andrew (Gedling)
Taylor, Sir Teddy (Southend, E)


Mitchell, Sir David (NW Hants)
Temple-Morris, Peter


Moate, Sir Roger
Thomason, Roy


Molyneaux, Rt Hon James
Thompson, Sir Donald (C'er V)


Monro, Rt Hon Sir Hector
Thompson, Patrick (Norwich N)


Montgomery, Sir Fergus
Thornton, Sir Malcolm


Moss, Malcolm
Thurnham, Peter


Needham, Rt Hon Richard
Townend, John (Bridlington)


Nelson, Anthony
Townsend, Cyril D (Bexl'yh'th)


Neubert, Sir Michael
Tracey, Richard


Newton, Rt Hon Tony
Trend, Michael


Nicholls, Patrick
Trimble, David


Nicholson, David (Taunton)
Trotter, Neville


Nicholson, Emma (Devon West)
Twinn, Dr Ian


Norris, Steve
Vaughan, Sir Gerard


Onslow, Rt Hon Sir Cranley
Viggers, Peter


Oppenheim, Phillip
Waldegrave, Rt Hon William


Ottaway, Richard
Walden, George






Walker, Bill (N Tayside)
Wilkinson, John


Waller, Gary
Willetts, David


Ward, John
Wilshire, David


Wardle, Charles (Bexhill)
Winterton, Mrs Ann (Congleton)


Waterson, Nigel
Wolfson, Mark


Watts, John
Wood, Timothy


Wells, Bowen
Yeo, Tim


Wheeler, Rt Hon Sir John
Young, Rt Hon George


Whitney, Ray



Whittingdale, John
Tellers for the Noes:


Widdecombe, Ann
Mr. Roger Knapman and


Wiggin, Sir Jerry
Mr. Gary Streeter.

Question accordingly negatived.

Main Question put:—

The House divided: Ayes 306, Noes 276.

Division No. 12]
[11.25pm


AYES


Ainsworth, Peter (East Surrey)
Clifton-Brown, Geoffrey


Aitken, Rt Hon Jonathan
Coe, Sebastian


Alison, Rt Hon Michael (Selby)
Colvin, Michael


Allason, Rupert (Torbay)
Congdon, David


Amess, David
Conway, Derek


Ancram, Michael
Coombs, Anthony (Wyre For'st)


Arnold, Jacques (Gravesham)
Coombs, Simon (Swindon)


Arnold, Sir Thomas (Hazel Grv)
Cope, Rt Hon Sir John


Ashby, David
Cormack, Sir Patrick


Atkins, Rt Hon Robert
Couchman, James


Atkinson, David (Bour'mouth E)
Cran, James


Atkinson, Peter (Hexham)
Currie, Mrs Edwina (S D'by'ire)


Baker, Rt Hon Kenneth (Mole V)
Curry, David (Skipton & Ripon)


Baker, Nicholas (North Dorset)
Davies, Quentin (Stamford)


Baldry, Tony
Davis, David (Boothferry)


Banks, Matthew (Southport)
Day, Stephen


Banks, Robert (Harrogate)
Deva, Nirj Joseph


Bates, Michael
Devlin, Tim


Batiste, Spencer
Dicks, Terry


Beggs, Roy
Dorrell, Rt Hon Stephen


Bellingham, Henry
Douglas-Hamilton, Lord James


Bendall, Vivian
Dover, Den


Beresford, Sir Paul
Duncan, Alan


Biffen, Rt Hon John
Duncan-Smith, Iain


Bonsor, Sir Nicholas
Dunn, Bob


Booth, Hartley
Durant, Sir Anthony


Boswell, Tim
Dykes, Hugh


Bottomley, Rt Hon Virginia
Eggar, Rt Hon Tim


Bowden, Sir Andrew
Elletson, Harold


Bowls, John
Emery, Rt Hon Sir Peter


Boyson, Rt Hon Sir Rhodes
Evans, David (Welwyn Hatfield)


Brandreth, Gyles
Evans, Jonathan (Brecon)


Brazier, Julian
Evans, Nigel (Ribble Valley)


Bright, Sir Graham
Evennett, David


Brooke, Rt Hon Peter
Faber, David


Brown, M (Brigg & Cl'thorpes)
Fabricant, Michael


Browning, Mrs Angela
Field, Barry (Isle of Wight)


Bruce, Ian (Dorset)
Fishburn, Dudley


Budgen, Nicholas
Forman, Nigel


Burns, Simon
Forsyth, Rt Hon Michael (Stirling)


Burt, Alistair
Forsythe, Clifford (S Antrim)


Butcher, John
Forth, Eric


Butler, Peter
Fowler, Rt Hon Sir Norman


Carlisle, John (Luton North)
Fox, Dr Liam (Woodspring)


Carlisle, Sir Kenneth (Lincoln)
Fox, Sir Marcus (Shipley)


Carrington, Matthew
Freeman, Rt Hon Roger


Carttiss, Michael
French, Douglas


Cash, William
Gale, Roger


Channon, Rt Hon Paul
Gallie, Phil


Chapman, Sir Sydney
Garnier, Edward


Churchill, Mr
Gill, Christopher


Clappison, James
Gillan, Cheryl


Clark, Dr Michael (Rochford)
Goodlad, Rt Hon Alastair


Clarke, Rt Hon Kenneth (Ru'clif)
Goodson-Wickes, Dr Charles





Gorman, Mrs Teresa
Marshall, John (Hendon S)


Gorst, Sir John
Marshall, Sir Michael (Arundel)


Grant, Sir A (SW Cambs)
Martin, David (Portsmouth S)


Greenway, Harry (Ealing N)
Mates, Michael


Greenway, John (Ryedale)
Mawhinney, R Hon Dr Brian


Griffiths, Peter (Portsmouth, N)
Mayhew, Rt Hon Sir Patrick


Grylls, Sir Michael
Mellor, Rt Hon David


Hague, Rt Hon William
Merchant, Piers


Hamilton, Sir Archibald
Mills, Iain


Hamilton, Neil (Tatton)
Mitchell, Andrew (Gedling)


Hampson, Dr Keith
Mitchell, Sir David (NW Hants)


Hanley, Rt Hon Jeremy
Moate, Sir Roger


Hannam, Sir John
Molyneaux, Rt Hon James


Hargreaves, Andrew
Monro, Rt Hon Sir Hector


Harris, David
Montgomery, Sir Fergus


Haselhurst, Sir Alan
Moss, Malcolm


Hawkins, Nick
Needham, Rt Hon Richard


Hawksley, Warren
Nelson, Anthony


Hayes, Jerry
Neubert, Sir Michael


Heald, Oliver
Newton, Rt Hon Tony


Heathcoat-Amory, David
Nicholls, Patrick


Hendry, Charles
Nicholson, David (Taunton)


Heseltine, Rt Hon Michael
Nicholson, Emma (Devon West)


Hicks, Robert
Norris, Steve


Higgins, Rt Hon Sir Terence
Onslow, Rt Hon Sir Cranley


Hill, James (Southampton Test)
Oppenheim, Phillip


Hogg, Rt Hon Douglas (G'tham)
Ottaway, Richard


Horam, John
Page, Richard


Hordern, Rt Hon Sir Peter
Paice, James


Howard, Rt Hon Michael
Patnick, Sir Irvine


Howell, Rt Hon David (G'dford)
Patten, Rt Hon John


Howell, Sir Ralph (N Norfolk)
Pattie, Rt Hon Sir Geoffrey


Hughes, Robert G (Harrow W)
Pawsey, James


Hunt, Rt Hon David (Wirral W)
Peacock, Mrs Elizabeth


Hunt, Sir John (Ravensbourne)
Pickles, Eric


Hunter, Andrew
Porter, Barry (Wirral S)


Jack, Michael
Porter, David (Waveney)


Jackson, Robert (Wantage)
Powell, William (Corby)


Jenkin, Bernard
Rathbone, Tim


Jessel, Toby
Redwood, Rt Hon John


Johnson Smith, Sir Geoffrey
Richards, Rod


Jones, Gwilym (Cardiff N)
Riddick, Graham


Jones, Robert B (W Hertfdshr)
Rifkind, Rt Hon Malcolm


Jopling, Rt Hon Michael
Robathan, Andrew


Key, Robert
Roberts, Rt Hon Sir Wyn


King, Rt Hon Tom
Robertson, Raymond (Ab'd'n S)


Kirkhope, Timothy
Robinson, Mark (Somerton)


Knight, Mrs Angela (Erewash)
Roe, Mrs Marion (Broxbourne)


Knight, R Hon Greg (Derby N)
Ross, William (E Londonderry)


Knight, Dame Jill (Bir'm E'st'n)
Rowe, Andrew (Mid Kent)


Knox, Sir David
Rumbold, Rt Hon Dame Angela


Kynoch, George (Kincardine)
Sackville, Tom


Lait, Mrs Jacqui
Sainsbury, Rt Hon Sir Timothy


Lamont, Rt Hon Norman
Scott, Rt Hon Sir Nicholas


Lang, Rt Hon Ian
Shaw, David (Dover)


Lawrence, Sir Ivan
Shaw, Sir Giles (Pudsey)


Legg, Barry
Shephard, Rt Hon Gillian


Leigh, Edward
Shepherd, Colin (Hereford)


Lennox-Boyd, Sir Mark
Shepherd, Richard (Aldridge)


Lester, Jim (Broxtowe)
Shersby, Sir Michael


Lidington, David
Sims, Roger


Lloyd, Rt Hon Sir Peter (Fareham)
Skeet, Sir Trevor


Lord, Michael
Smith, Tim (Beaconsfield)


Luff, Peter
Smyth, The Reverend Martin


Lyell, Rt Hon Sir Nicholas
Soames, Nicholas


MacGregor, Rt Hon John
Speed, Sir Keith


MacKay, Andrew
Spencer, Sir Derek


Maclean, Rt Hon David
Spicer, Sir James (W Dorset)


McLoughlin, Patrick
Spicer, Michael (S Worcs)


McNair-Wilson, Sir Patrick
Spink, Dr Robert


Madel, Sir David
Spring, Richard


Maitland, Lady Olga
Sproat, Iain


Malone, Gerald
Squire, Robin (Hornchurch)


Mans, Keith
Stanley, Rt Hon Sir John


Marland, Paul
Steen, Anthony


Marlow, Tony
Stephen, Michael






Stern, Michael
Walden, George


Stewart, Allan
Walker, Bill (N Tayside)


Sumberg, David
Waller, Gary


Sweeney, Walter
Ward, John


Sykes, John
Wardle, Charles (Bexhill)


Tapsell, Sir Peter
Waterson, Nigel


Taylor, Ian (Esher)
Watts, John


Taylor, John M (Solihull)
Wells, Bowen


Taylor, Sir Teddy (Southend, E)
Wheeler, Rt Hon Sir John


Temple-Morris, Peter
Whitney, Ray


Thompson, Sir Donald (C'er V)
Widdecombe, Ann


Thompson, Patrick (Norwich N)
Wiggin, Sir Jerry


Thornton, Sir Malcolm
Wilkinson, John


Thurnham, Peter
Willetts, David


Townend, John (Bridlington)
Winterton, Mrs Ann (Congleton)


Tracey, Richard
Wolfson, Mark


Trend, Michael
Wood, Timothy


Trimble, David
Yeo, Tim


Trotter, Neville
Young, Rt Hon Sir George


Twinn, Dr Ian



Vaughan, Sir Gerard
Tellers for the Ayes:


Viggers, Peter
Mr. Roger Knapman and


Waldegrave, Rt Hon William
Mr. Gary Streeter.




NOES


Abbott, Ms Diane
coffey


Ainger, Nick
Cohen, Hary


Ainsworth, Robert (Cov'try NE)
Connarty, Michael


Allen, Graham
Cook, Frank (Stockton N)


Alton, David
Cook, Robin (Livingston)


Anderson, Ms Janet (Ros'dale)
Corbett, Robbin


Armstrong, Hillary
Corbyn, Jeremy


Ashdown, Rt Hon Paddy
Corston, Jean


Ashdown, Joe
cousins, Jim


Austin-Walker, John
Cox, Tom


Banks, Tony (Newham NW)
Cummings, John


Barness, Harry
Cunliffe, Lawrence


Barron, Kevin
Cunningham, Jim (Covy SE)


Battle, John
Cunningham, Rt Hon Dr John


Bayley, Hugh
Cunningham, Roseanna


Beckett, Rt Hon Margaret
Dalyell, Alistair


Bell, Stuart
Davies, Bryan (Oldham C'tral)


Benn, Rt Hon Tony
Davies, Chris (L'Boro & S'worth)


Bennett, Andrew F
Davies, Rt Hon Denzil (Llanelli)


Benton, Joe
Davies, Ron (Caerphilly)


Bermingham, Gerald
Denham, John


Berry, Roger
Dewar, Donald


Betts, Clive
Dixon, Don


Blunkett, David
Dobson, Frank


Boateng, Paul
Donohoe, Brian H


Bradley, Keith
Dowd, Jim


Bray, Dr Jeremy
Dunwoody, Mrs Gwyneth


Brown, Gordon (Dunfermline E)
Eagle, Ms Angela


Brown, N (N'c'tle upon Tyne E)
Eastham, Ken


Burden, Richard
Etherington, Bill


Byers, Stephan
Evans, John (St Helens N)


Caborn, Richard
Ewing, Mrs Margaret


Callaghan, Jim
Fatchett, Derek


Campbell, Mrs Anne (C'bridge)
Faulds, Andrew


Campbell, Menzies (Fife NE)
Field, Frank (Birkenhead)


Campbell-Savours, D N
Fisher, Mark


Canavan, Dennis
Flynn, Paul


Cann, Jamie
Foster, Rt Hon Derek


Carlile, Alexander (Montgomery)
Foster, Don (Bath)


Chidgey, David
Foulkes, George


Chisholm, Malcolm
Fyfe, Maria


Church, Judith
Galbraith, Sam


Clapham, Michael
Galloway, George


Clark, Dr David (South Shields)
Gapes, Mike


Clarke, Eric (Midlothian)
Garrett, John


Clarke, Tom (Monklands W)
George, Bruce


Cleland, David
Gerrard, Neil


Clwyn, Mrs Ann
Gilbert, Rt Hon Dr John





Godman, Dr Norman A
Madden, Max


Godsiff, Roger
Maddock, Diana


Golding, Mrs Llin
Mahon, Alice


Gordon, Mildred
Mandelson, Peter


Grant, Bernie (Tottenham)
Marek, Dr John


Griffiths, Nigel (Edinburgh S)
Marshall, David (Shettleston)


Griffiths, Win (Bridgend)
Martlew, Eric


Grocott, Bruce
Maxton, John


Gunnell, John
Meacher, Michael


Hain, Peter
Meale, Alan


Hall, Mike
Michael, Alun


Hanson, David
Michie, Bill (Sheffield Heeley)


Hardy, Peter
Michie, Mrs Ray (Argyll & Bute)


Harman, Ms Harriet
Milburn, Alan


Harvey, Nick
Miller, Andrew


Hattersley, Rt Hon Roy
Mitchell, Austin (Gt Grimsby)


Henderson, Doug
Moonie, Dr Lewis


Heppell, John
Morgan, Rhodri


Hill, Keith (Streatham)
Morley, Elliot


Hinchliffe, David
Morris, Rt Hon Alfred (Wynshawe)


Hodge, Margaret
Morris, Estelle (B'ham Yardley)


Hoey, Kate
Morris, Rt Hon John (Aberavon)


Hogg, Norman (Cumbernauld)
Mowlam, Marjorie


Home Robertson, John
Mudie, George


Hood, Jimmy
Mullin, Chris


Hoon, Geoffrey
Murphy, Paul


Howarth, Alan (Strat'rd-on-A)
Oakes, Rt Hon Gordon


Howarth, George (Knowsley North)
O'Brien, Mike (N W'kshire)


Howells, Dr Kim (Pontypridd)
O'Brien, William (Normanton)


Hoyle, Doug
O'Hara, Edward


Hughes, Kevin (Doncaster N)
Olner, Bill


Hughes, Robert (Aberdeen N)
Paisley, The Reverend Ian


Hughes, Roy (Newport E)
Parry, Robert


Hughes, Simon (Southwark)
Pearson, Ian


Hutton, John
Pendry, Tom


Illsley, Eric
Pickthall, Colin


Ingram, Adam
Pike, Peter L


Jackson, Glenda (H'stead)
Pope, Greg


Jackson, Helen (Shef'ld, H)
Powell, Ray (Ogmore)


Jamieson, David
Prentice, Bridget (Lew'm E)


Janner, Greville
Prentice, Gordon (Pendle)


Johnston, Sir Russell
Prescott, Rt Hon John


Jones, Barry (Alyn and D'side)
Primarolo, Dawn


Jones, Ieuan Wyn (Ynys Môn)
Purchase, Ken


Jones, Jon Owen (Cardiff C)
Quin, Ms Joyce


Jones, Lynne (B'ham S O)
Radice, Giles


Jones, Martyn (Clwyd, SW)
Randall, Stuart


Jones, Nigel (Cheltenham)
Raynsford, Nick


Jowell, Tessa
Reid, Dr John


Kaufman, Rt Hon Gerald
Rendel, David


Keen, Alan
Robertson, George (Hamilton)


Kennedy, Charles (Ross,C&S)
Robinson, Geoffrey (Co'ty NW)


Khabra, Piara S
Robinson, Peter (Belfast E)


Kilfoyle, Peter
Roche, Mrs Barbara


Kirkwood, Archy
Rogers, Allan


Lestor, Joan (Eccles)
Rocker, Jeff


Lewis, Terry
Rooney, Terry


Liddell, Mrs Helen
Ross, Ernie (Dundee W)


Litherland, Robert
Rowlands, Ted


Livingstone, Ken
Ruddock, Joan


Lloyd, Tony (Stretford)
Salmond, Alex


Llwyd, Elfyn
Sedgemore, Brian


Loyden, Eddie
Sheerman, Barry


Lynne, Ms Liz
Sheldon, Rt Hon Robert


McAllion, John
Short, Clare


McAvoy, Thomas
Simpson, Alan


McCartney, Ian
Skinner, Dennis


McCrea, The Reverend William
Smith, Andrew (Oxford E)


Macdonald, Calum
Smith, Chris (Isl'ton S & F'sbury)


McFall, John
Smith, Llew (Blaenau Gwent)


Mackinlay, Andrew
Snape, Peter


McLeish, Henry
Soley, Clive


Maclennan, Robert
Spearing, Nigel


McNamara, Kevin
Speller, John


MacShane, Denis
Squire, Rachel (Dunfermline W)


McWilliam, John
Steinberg, Gerry






Stevenson, George
Wareing, Robert N


Stott, Roger
Wicks, Malcolm


Strang, Dr. Gavin
Wigley, Dafydd


Straw, Jack
Williams, Alan W (Carmarthen)


Sutcliffe, Gerry
Wilson, Brian


Taylor, Mrs Ann (Dewsbury)
Winnick, David


Thompson, Jack (Wansbeck)
Wise, Audrey


Timms, Stephen
Worthington, Tony


Tipping, Paddy
Wray, Jimmy


Touhig, Don
Wright, Dr Tony


Vaz, Keith
Young, David (Bolton SE)


Walker, Rt Hon Sir Harold



Wallace, James
Tellers for the Noes:


Walley, Joan
Mr. Dennis Turner and


Wardell, Gareth (Gower)
Mrs. Jane Kennedy.

Question accordingly agreed to.

Resolved,

That this House welcomes the public expenditure plans announced by Mr. Chancellor of the Exchequer in his Budget speech on 28th November; congratulates Her Majesty's Government on its continued firm control of public spending and its success in reducing bureaucracy, increasing efficiency and tackling fraud, while providing more resources for the delivery of key public services; applauds Her Majesty's Government's determination to reduce further the share of national income taken by the State; and commends the Government for the success of its Private Finance Initiative and the other innovative ways it is forming partnerships with the private sector to improve the efficiency and quality of public services.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 101(6) (Standing Committees on Delegated Legislation),

HEALTH AND SAFETY

That the draft Health and Safety (Repeals and Revocations) Regulations 1995, which were laid before this House on 20th November, be approved.

URBAN DEVELOPMENT

That the Bristol Development Corporation (Area and Constitution) Order 1995, dated 6th November 1995, a copy of which was laid before this House on 15th November, be approved.—[Dr. Liam Fox.]

Question agreed to.

SCOTTISH GRAND COMMITTEE

Motion made, and Question put forthwith, pursuant to Standing Order No. 94H(1) (Scottish Grand Committees (sittings)),

That the Scottish Grand Committee shall meet:

1. in Edinburgh City Chambers on Monday 11th December; and
2. in Glasgow City Chambers on Monday 18th December.—[Dr. Liam Fox.]

Question agreed to.

Metticillin-Resistant Staphylococcus Aureus

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

Mr. Harry Cohen: I welcome the Minister to his new post and wish him well in it. I am very pleased to have secured this debate on metticillin-resistant staphylococcus aureus. That is the only time that I shall mention its full title. From now on I shall refer to it as MRSA. I declare an interest in that Unison pays me £500 towards my office allowance for payment of staff, but I am not raising this debate on its behalf. I also apologise for the cold that I am carrying. I look as if I am rehearsing for the role of Santa Claus with this red nose. For reasons that will become clear in my speech, I am not taking any antibiotics for my cold.
I decided to raise this subject after an article in my local paper, the Waltham Forest Guardian Series, on 14 September gave me quite a start. It said that Mr. David Chudley, a 44-year-old father of seven, was admitted to my local hospital, Whipps Cross, with a routine leg fracture after a road accident. Within a little while of being admitted with that minor leg injury, he died from the MRSA infection. His wife, Christine, is quoted as saying:
When someone says your husband has got a broken leg, you don't expect him to die.
The report then says that his is not the only death and that there have been two connected with the bug. A consultant at the hospital has admitted that the hospital has 20 or 30 patients carrying the bug at any one time. The other man who died was Mr. Kevin Cox from Chingford; he died in February from MRSA.
The bacterium has become immune to the strongest of antibiotic drugs. It sticks to the windpipe of its victim and infects the lungs. It forms pus and can cause pneumonia, according to the local paper. The coroner wrote to the Whipps Cross medical director suggesting that the hospital should set up special isolation wards to contain the bug. The article concludes:
MRSA is a problem in hospitals across the country but is particularly bad in the south of England.
The first few cases of the bacteria were reported in 1991. Two years later there were 300 cases in more than 40 hospitals. Now 129 hospitals in the UK are reporting it.
That is an amazing figure which shows the rapid spread of MRSA. In the same edition of my local paper, Bryan Harrison of Forest Healthcare trust said that hospitals were not a healthy place to be in. He was clearly alluding to the MRSA bug.
The 1990s have seen a massive increase in MRSA infection in hospitals. The privatisation of cleansing services in the mid- 1980s, worsening the standards of cleanliness in hospitals, has been a contributory factor, but I acknowledge other factors, especially the over-use of antibiotics. My mother's common-sense dictum to me as a child was that people should not take antibiotics unless they really needed them. If people did, antibiotics would not have the necessary effect when they had to have them. There has been indiscriminate and


inappropriate prescribing, although probably less in this country than in other countries. That has resulted in more antibiotic-resistant bacteria such as MRSA.
In the 1990s, there has been a worldwide resurgence of bacterial and viral diseases. Virtually all major disease-causing bacteria seem to have acquired antibiotic-resistant characteristics. There has been a massive increase in the population at risk because their immune system has been compromised in some way. Examples are cancer and leukaemia treatments and transplants, AIDS high-dose steroid treatments, invasive medical intervention and the prolonged survival of patients with chronic debilitating diseases. That resistance has come about and MRSA has spread.
I thank Dr. Jane Cushion of the House of Commons Library for her excellent briefing on MRSA; I shall summarise some of it. Staphylococcus aureus is a common bacterium which may be carried in the nose; about 50 per cent. to 75 per cent. of healthy people may carry it. Less often, it is carried on the skin, usually in the armpit or in other warm, moist areas, or in the mucous membranes, such as the lining of the mouth and gut. A significant proportion of the population are reservoirs for the bacterium from whom it can escape and cause disease. Its optimum temperature for growth is 37 deg. C, which is roughly equivalent to normal body temperature.
MRSA causes infections and diseases which can result in the production of pus. The infection may be superficial, with boils, carbuncles and abscesses. Deep infections, although less common, are much more serious and include septicaemia, endocarditis—infection of the heart valves—osteomyelitis, pneumonia, toxic food poisoning, toxic shock syndrome and skin exfoliation syndrome.
Penicillin dealt a big blow to bacteria infections. In the 1950s bacteria developed which were resistant to penicillin. The antibiotic flucloxacillin was subsequently developed and kept down infections by such bacteria. There has been a large increase particularly since 1983–84 in staphylococcus aureus, which is resistant to the commonly used antibiotics. That is a serious problem. Some strains of MRSA possess the capacity to spread with ease. They have caused hospital outbreaks which have proved difficult to control.
Risk management programmes are clearly needed in hospitals to improve the quality of patient care and the occupational health of the staff. Hospital management has legal duties. The Government have introduced the Control of Substances Hazardous to Health Regulations 1994, which cover disease-causing organisms. About 130 hospitals have reported cases of MRSA infection. The presence of MRSA has virtually become a fact of life in most hospitals. There have been larger outbreaks in the west midlands and at Southend hospital. It is a most serious problem.
The document "Hospital Infection Control" prepared by the hospital infection working group of the Department of Health and the Public Health Laboratory Service refers to the need to have in place infection control staff in hospitals. It says that some of the highly resistant strains of MRSA
are already resistant to most of the available antibiotics and are likely to create major therapeutic problems in the future.
It says that those strains of MRSA are
particularly hazardous in high risk units such as intensive care. Implementation of effective antibiotic policies…are necessary…Surveillance for rapid detection and the provision of adequate isolation facilities are important in every hospital…Every hospital should have an infection control team.
Such teams have expert membership and include an infection control doctor and consultant medical microbiologist. The document also said:
Every hospital should be covered by a Hospital Infection Control Committee.
Such committees include, as well as the experts in the infection control team, the chief executive and the consultant in communicable diseases control.
The Department of Health should require every hospital authority to implement the administrative procedure that I have outlined and check that it does so. MRSA is a major drain on resources. It is costly for hospitals because it means that patients have to stay in hospital for extra time. For example, when Kettering general hospital had a bout of the disease in 1991 it cost the hospital almost half a million pounds. The Government keep saying to health authorities and trusts that the cost of MRSA can be met from existing resources. Increasingly, they cannot. The Government should recognise that and compensate health authorities and trusts.
The hospital infection working group said of MRSA:
The total annual costs in the UK, although not yet fully quantified, are undoubtedly high.
The cost is not just to the health authorities but to the people affected and their family because patients are forced to stay in hospital longer.
The hospital infection working group said:
Overall we believe it is possible that currently about 30 per cent. of hospital acquired infection could be prevented by better application of existing knowledge and implementation of realistic infection control policies…It must also be recognised that infection control action will be constrained by the resources available.
Again, the pressure is on the Government to deal with the problem.
There is one other important feature—the danger that MRSA, which is currently a hospital infection, could spread into the community and especially into nursing homes. Time is short, so I cannot go into that in greater detail.
This is an important public health issue. I pay tribute to the work of the Public Health Laboratory Service, which includes the Communicable Disease Surveillance Centre. It collects and analyses information on drug resistance. The Government should put in the resources to boost the service and the information that it gives to GPs and hospitals.
The British Society for Antimicrobial Chemotherapy, the BSAC, in a report last year stated:
the steady rise in antibiotic prescriptions needs to be reversed
and that
failure to do so would increase the prevalence of drug-resistant bacteria.
The Office of Science and Technology has also given me information about the prevalence of antibiotics in foods. Some were brought in as scientific markers; others were introduced in animal feeds. Earlier this year evidence was given to the Ministry of Agriculture, Fisheries and Food that there had been a big increase in


adult cattle with antibiotic resistance. There were something like 400 cases in 1990 in England and Wales, which increased to 1,600 in 1993. The cause was thought to be the routine feeding of low antibiotic doses to intensely reared livestock to boost growth and heavy doses to prevent heal infection.
Scientists have expressed concern that the increasing resistance to antibiotics could pass through the food chain but MAFF sticks to the 1969 Swann report, which says that new potent antibiotics should not necessarily be precluded from therapeutic use in animals. The Government should have a co-ordinated policy on MRSA. The MAFF line should not be independent of but subservient to the best interests of public health.
In the few minutes left, I will spell out some of the essential policies needed to tackle MRSA effectively. First, there need to be improved cleanliness standards in hospitals. That must include stricter enforcement. Those responsible, the managers, must be taken to the courts for neglect if they do not keep up with such standards. However, the Government must recognise that such higher standards of cleanliness need more, not fewer, resources.
Secondly, there has to be funding for extra capacity for hospitals where wards have had to be closed due to MRSA outbreaks. Ward provision has been cut right to the bone and there is not the extra capacity that MRSA requires. If such action is not taken, there will be problems right through the system. There should be smaller wards. The effect of MRSA when it strikes is far less devastating with smaller wards. Whole wards have to close when it does strike.
The Department of Health must take a proactive role in ensuring that every hospital has an effective risk management programme, which should include isolation facilities, infection control teams, and appropriate-use-only antibiotic policies.
Appropriate-use-only antibiotic policies should also apply to GP prescribing and the Government should institute an immediate programme of education for GPs. With such widespread ignorance about MRSA, a programme of education should be introduced for all health workers who are likely to come across it.
The possibility of MRSA spreading from hospitals into the wider community is a real danger that requires active consideration and policies to deal with it. Increased use of day surgery and early discharge from hospital may increase the risk of MRSA, and those practices should be monitored.
A higher priority should be given to research into the causes of and cures for this killer bug. The Government should get their act together across Departments so that the Ministry of Agriculture, Fisheries and Food does not merrily continue pumping antibiotics into animals, so spreading antibiotic resistance through the food chain. The interests of public health should take precedence.
More needs to be done to combat the increased incidence of virulent MRSA, which killed Mr. Chudley and Mr. Cox, who were referred to in my local paper. I hope that the Department of Health will now devote far more thought and action to combating it.

The Parliamentary Under-Secretary of State for Health (Mr. John Horam): I thank the hon. Member for Leyton (Mr. Cohen) for his kind welcome. I am sorry that he is not in perfect health, but despite that, and the seriousness of the subject, I am glad to se that he has retained his cheerful demeanour. I am glad that the hon. Gentleman has raised the important issue of metticillin resistant staphylococcus aureus—like the hon. Gentleman, I hope I have passed the test of pronouncing it—commonly known as MRSA, and that I have the opportunity to respond to the debate.
This is an issue that causes considerable concern to many people, but I must emphasise that it is not a new problem. The NHS has spent many years controlling it. I must say that in most countries the spread of that micro-organism has now been accepted as more or less inevitable. It is only because our health service offers high quality infection control systems that we are in a position to control it.
Perhaps I might start by setting the record straight on what MRSA actually is and how it causes infection. MRSA is a relatively antibiotic-resistant form of the bacterium staphylococcus aureus. Staph. aureus, the alternative way of referring to it, is one of the commonest and most ubiquitous of all the bacteria with which we are surrounded. As the hon. Gentleman said, normally it does us no harm.
About one third of us carry the bacteria on our skin or in our nose and throat and it causes us no problem. But if the skin is cut, or if resistance to infection is lost for any reason, the germ can multiply and set up an infection. Mostly, it is a trivial infection of the skin, but in patients who are in hospital it can sometimes become more serious. Many hospital patients have catheters and drips of various sorts going through the skin, which give bacteria like staph. aureus an easy route into the body. Many patients have had operations, so they have a wound that can become infected; some have poor resistance to infection because of their illness or their treatment, and are vulnerable to serious infections such as septicaemia or pneumonia. Staph. aureus can cause all those problems—a range of infections from the trivial to the life threatening.
MRSA, which is the antibiotic resistant variety of staph. aureus, acts in exactly the same way and causes the same range of infections. Again, the majority of people who carry it come to no harm at all, and if it does cause an infection, the range of problems is just the same—the infections are no worse than those caused by the ordinary bacterium.
The reason why MRSA is seen as more of a problem is that if an infection develops it is more difficult to treat because many of the commonly used antibiotics are not effective against it. There are antibiotics that can be used—the infection is not untreatable. Those antibiotics are, however, more difficult to use, they have more side effects and, of course, they are more expensive.
Some strains of MRSA show a greater tendency to spread easily from person to person than others. The first three of those strains appeared in the early 1980s and patients in many hospitals were affected. Those strains became less common after a few years, thanks to the efforts of hospital infection control teams to prevent it from spreading, and for a time the spread of MRSA appeared to have receded.
Now we have two new strains which spread particularly easily and again many hospitals are having to take action to control it. We think that that is an effort worth making,


although, as I have already said, in many other countries, where antibiotics are available much more freely than here and infection control arrangements are less effective, the majority of staph. aureus in hospital patients is already antibiotic resistant. That has simply been accepted as inevitable, and requiring no particular action.
The Department of Health takes the whole subject of infection control in hospital very seriously. We issued comprehensive new guidance to the NHS earlier this year, covering the structure and activities of infection control services, surveillance of infections—including those due to antibiotic resistant organisms—and the control of outbreaks. It suggests that every hospital should have an infection control team, consisting of a medical specialist—usually a consultant microbiologist—and one or more trained infection control nurses. I can assure the hon. Gentleman that that is the case at Whipps Cross.
The guidance covers the role of the team in leading and co-ordinating infection control activity in the hospital. We also give advice to commissioners of health care about what infection control arrangements they should be looking for in trusts.
The guidance to which I have just referred deals with control of infection generally in hospitals. More detailed guidelines on the control of MRSA in hospitals have been produced by two of the interested professional organisations—the Hospital Infection Society and the British Society for Antimicrobial Chemotherapy.
The first of those guidelines was produced in 1986, but they have since been updated. The Department of Health gave them its formal support last September and is now working with the same organisations to produce a further revision in the light of advancing scientific knowledge and experience in controlling the micro-organism.
The Public Health Laboratory Service provides specialist strain-typing facilities and expert advice to help hospitals affected by MRSA. It carries out surveillance of the prevalence of the organism and can provide information, for example, when a patient is transferred from abroad to a hospital here. The PHLS is presently carrying out a special study of hospitals affected by the two main epidemic strains of MRSA to determine the epidemiology and most effective method of control of the organism.
The hon. Gentleman is particularly concerned about the problem locally and he also made a number of important points about the national position. It stems in part from comments made at the inquest into a tragic death at Whipps Cross hospital last winter. I am assured that the NHS trust concerned—Forest Healthcare—has made a high priority of its efforts to prevent the spread of MRSA. Patients known to be carrying MRSA are nursed in isolation, and those admitted to the intensive care unit are screened regularly for the bacterium. The effectiveness of those measures is kept under review and we are confident that the situation in Whipps Cross is being controlled satisfactorily.
On the national position, the hon. Gentleman mentioned a point on which I would like to comment. There has also been concern among owners and managers of some of the nursing and residential nursing homes that MRSA may been a problem for their residents. It is based on a misunderstanding of the nature of the bacterium and the type of infection that it may cause.
Residents in most of those community settings are at no greater risk of infection than the general population. They do not have medical devices such as drips penetrating the skin and they do not have surgical wounds. There has never been an outbreak of infection due to MRSA in such a home, nor is there likely to be one.
Last year, the Department of Health worked with the professional organisation representing consultants in communicable disease control to produce guidance on infection control in nursing and residential homes. The guidance advised that a person carrying or infected with MRSA was not a risk to other residents in most of those homes and that routine arrangements designed to prevent all types of infection, such as good personal hygiene, are sufficient to deal with it.
The Department, however, recently held a seminar for insurers of such homes to inform and reassure them about MRSA. It will also take part in a further seminar for owners and managers of homes and for local and health authority staff responsible for the registration of homes and will issue further guidance to those groups in the new year.
It is important that we maintain a balanced view of the problem of MRSA in hospitals. The majority of cases of all types of infection in hospital patients cannot be prevented with our current knowledge. MRSA does not cause more infections than other types of staph. aureus with which we are surrounded. Despite the huge increase in the complexity of medical treatment and in the number of patients with reduced resistance to infection treated in our hospitals in the past 10 or 15 years, there is good evidence that hospital-acquired infection, including MRSA, is no more common now than it was in 1980. That evidence is based on a wide survey including hundreds of thousands of patients in at least 200 hospitals. MRSA is not untreatable and nor is it a new scourge, but it is a problem worth considerable efforts to control. Doctors and nurses in hospitals in many parts of the country are working hard to do just that.
I am grateful to the hon. Member for Leyton for raising the subject, and I hope that I have assured him about the position in Whipps Cross hospital. The total situation is much more satisfactory than the hon. Gentleman might have thought.

Question put and agreed to.

Adjourned accordingly at four minutes past Twelve midnight.